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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K/A

    FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(Mark One)
     [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended January 30, 1998

     [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
                              EXCHANGE ACT OF 1934

            For the transition period from ____________to_____________

                           COMMISSION FILE NO. 1-13322

                                JUMBOSPORTS INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)
             

                  FLORIDA                               52-1643157
     -------------------------------                -------------------
     (STATE OR OTHER JURISDICTION OF                (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)                IDENTIFICATION NO.)

        4701 W. HILLSBOROUGH AVENUE
              TAMPA, FLORIDA                               33614
  ---------------------------------------                ----------
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (813) 886-9688

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                    NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                        ON WHICH REGISTERED
---------------------------------------            -----------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE            NEW YORK STOCK EXCHANGE


           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                               TITLE OF EACH CLASS
                               -------------------
                 4 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2000
                 ----------------------------------------------

     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant as of March 27, 1998, was $33.2 million.  The number of shares of
the registrant's common stock outstanding as of March 27, 1998, was 20,392,873.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Proxy Statement for Annual Meeting of Stockholders to be held June 18,
1998...........................Part III
===============================================================================


<PAGE>


     AS USED IN THIS ANNUAL  REPORT ON FORM 10-K,  UNLESS THE  CONTEXT  REQUIRES
OTHERWISE,  THE TERMS THE "COMPANY" AND "JUMBOSPORTS"  REFER TO JUMBOSPORTS INC.
AND ITS OPERATING SUBSIDIARIES.

                                     PART 1

ITEM 1.  BUSINESS

GENERAL

     On  February  14,  1997,   the  Company  (which  prior  to  such  date  was
incorporated in Delaware under the name "Sports & Recreation,  Inc.") was merged
into a wholly owned subsidiary  organized under Florida law. The purpose of such
merger was to change the  corporate  domicile  of the Company  from  Delaware to
Florida.  Also on February 14, 1997, the Company changed its corporate name from
Sports & Recreation, Inc. to JumboSports Inc.

     JumboSports  is  a  specialty  retailer  of  quality  name  brand  sporting
equipment,  athletic  footwear and apparel,  operating 59 big-box sporting goods
superstores  in 49 markets and 23 states.  The Company began fiscal 1997 with 85
stores. In October 1997, the Company announced the closure of eight stores,  and
in January 1998,  an  additional  18 stores were  identified to be closed in the
first half of fiscal  1998.  The  Company's  business  strategy  is to offer its
customers the best overall value in sporting goods through a wide  assortment of
quality  name brand  merchandise,  superior  customer  service  and  competitive
prices.  The Company's  superstores  average  approximately  50,000 gross square
feet. JumboSports has located stores in Standard Metropolitan  Statistical Areas
with populations as small as 200,000 and as large as 3,000,000.

     As of January 30, 1998, the Company  employed  approximately  3,500 people.
None  of  the  Company's   associates  are  covered  by  collective   bargaining
agreements.  The Company believes that its relationships with its associates are
good.

     The Company believes it has established a reputation with the consumer as a
premier retailer of hardlines sporting goods (equipment  required to participate
in sports and recreational  activities i.e.:  baseball bats,  footballs,  etc.).
While a significant  emphasis on improving  softlines  (athletic,  team logo and
casual apparel and athletic and casual footwear)  presentations will be inherent
in future  store  design,  the  Company  does not expect to abandon a  hardlines
emphasis.

     The Company's  merchandising strategy is to offer both breadth and depth of
selection  in  quality  name  brand  sporting  goods  in  each  of  its  product
categories.  Each store offers approximately 70,000 stock keeping units ("SKUs")
across 23 major  departments and over 200  subdepartments.  The Company believes
that its customer service levels and merchandise  presentation allow it to offer
quality name brands,  some of which are not currently  carried by other sporting
goods competitors. The Company's target customer ranges from the frequent sports
enthusiast to the casual sporting goods customer.

     The sporting  goods  retail  business is seasonal in nature with the fourth
quarter (Christmas selling season) representing approximately 30% of sales for a
JumboSports  store that is open for the entire  year.  The average  maturity and
geographic  dispersion of the Company's store base may impact this percentage in
the future.  The Company operates in one business segment.  See Item 6, Selected
Financial Data, for financial information.

INDUSTRY AND COMPETITION

     Management believes that certain characteristics and competitive factors of
the sporting goods industry make it  particularly  well suited for the Company's
big-box format.  These  characteristics  and factors include a large and growing
market,  fragmented  competition,  limited  assortments  offered by  traditional
outlets  for  sporting  goods,   customer   preference  for  one-stop   shopping
convenience  and the growing  importance  of  delivering  value to the  customer
through selection,  service and price.  There are over 180 metropolitan  markets
across the country that fit the Company's target criteria.

                                       2

<PAGE>

     The Company purchases  merchandise from over 1,000 vendors. In fiscal 1997,
the one-hundred highest volume vendors represented over 70% of total merchandise
purchased.  Nike, Inc., being the Company's largest vendor,  accounted for 12.6%
of total merchandise  purchased.  The Company does not maintain any long-term or
exclusive  commitments or arrangements to purchase from any vendor.  The Company
is one of the largest customers for many of its vendors.

     While  JumboSports'  competition  differs by market,  management  generally
classifies its competition within one of the following categories:

     TRADITIONAL AND SPECIALTY SPORTING GOODS RETAILERS.  This category includes
traditional sporting goods chains (e.g., Dunham's, MC Sports),  specialty sports
stores (e.g.,  Foot Locker,  Champs) and local sporting goods  retailers  (e.g.,
local independent stores, pro shops).  These stores typically range in size from
the  small  1,000  square  foot  pro  shops to the  larger  20,000  square  foot
traditional  sporting goods chains. The traditional and specialty sporting goods
retailers are primarily located in regional malls, strip shopping centers, local
country  clubs and resorts.  The  traditional  chains and local  sporting  goods
stores typically carry a varied assortment of merchandise;  however, the size of
their stores limits the breadth and depth of selection. The specialty stores and
pro shops often carry a wide assortment of one specific product  category,  such
as athletic  shoes,  fishing gear,  golf or tennis  equipment.  In general,  the
traditional  and  specialty  sporting  goods  retailers  offer  a  more  limited
selection at higher prices than JumboSports.

     MASS MERCHANDISERS. This category includes discount stores (e.g., Wal-Mart,
Kmart) and  department  stores  (e.g.,  Sears).  These stores range in size from
approximately  50,000  to  200,000  square  feet and are  primarily  located  in
regional  malls and strip  shopping  centers  in  markets  across  the  country.
Sporting  goods  merchandise  and apparel  represent only a portion of the total
merchandise sales in these stores and generally reflect a more limited selection
with fewer high quality name brands. Although generally price competitive, these
stores have limited  customer  service since the store personnel  generally lack
technical expertise in selling sporting goods.

     BIG-BOX SPORTING GOODS CHAINS. This category includes the "category killer"
sporting goods retailers (e.g. The Sports Authority,  Oshman's Superstores, Gart
Sports) more directly  comparable to  JumboSports.  The big-box  stores range in
size from 35,000 to 100,000  square feet and offer a selection of sporting goods
merchandise  and  apparel of 50,000 to 125,000  SKUs.  These  stores  compete on
selection  and  depth of high  quality  merchandise  and on the  basis of price;
certain  operators  are able to attract  higher-end  brands not carried by other
competitive channels of distribution.

     The Company  believes that  although it will  continue to face  competition
from retailers in all three of the categories  referred to above,  over the long
term the most  significant  competition  will be from the big-box sporting goods
retailers.  Of the Company's  stores,  approximately  20 do not  presently  face
competition from such big-box sporting goods  retailers.  Management  expects it
will face additional competition in new and existing markets from big-box stores
over the next few years.

ENVIRONMENTAL

     Compliance with federal, state and local environmental laws and regulations
has not had,  and is not  expected  to have,  a material  effect on the  capital
expenditures, earnings and competitive position of the Company.

                                       3

<PAGE>

ITEM 2.  PROPERTIES.

     As of January 30, 1998,  the Company  operated 77 retail stores of which 18
are scheduled to close in May 1998. These 18 closing stores operate in 13 states
(2 in Arizona, 1 in California,  1 in Illinois,  1 in Indiana, 1 in Kansas, 1 in
Michigan,  1 in  Missouri,  3 in New York, 3 in Ohio,  1 in  Pennsylvania,  1 in
Texas, 1 in Virginia and 1 in Wisconsin).  The remaining 59 stores operate in 23
states (9 in Florida, 2 in Alabama, 1 in Arkansas,  1 in Arizona, 3 in Colorado,
1 in  Delaware,  1 in Georgia,  1 in  Illinois,  2 in Iowa,  1 in Indiana,  1 in
Kansas, 3 in Kentucky, 5 in Louisiana, 1 in Mississippi,  4 in North Carolina, 2
in Nebraska,  1 in Nevada, 1 in Ohio, 3 in Oklahoma,  3 in South Carolina,  5 in
Tennessee,  5 in Texas and 3 in Virginia)  and its  Corporate  Headquarters  are
located in Tampa, Florida. The Company owns 39 stores and leases the other 20 of
its remaining 59 retail stores.  The primary lease terms are for 10 to 20 years,
with options to renew ranging from two to four additional  five-year  terms. Two
of the leases are capital  leases.  Additionally,  as of January 30,  1998,  the
Company  owned  21  properties  held for sale  and has  five  leases  on  stores
scheduled to be closed.

ITEM 3.  LEGAL PROCEEDINGS.

     The Company is from time to time involved in routine litigation  incidental
to the conduct of its  business.  The Company  believes  that no such  currently
pending routine  litigation to which it is a party will have a material  adverse
effect on its financial condition or results of operations.

     In  October  1997,  the  Company  announced  that  it was  terminating  its
relationship with AMR Services Corporation ("AMR Services") for the operation of
the Company's warehouse facility in Nashville,  Tennessee.  On October 10, 1997,
the Company  instituted  litigation  against AMR  Services in the United  States
District  Court,  Middle  District of Florida,  seeking  damages,  a declaratory
judgment,  and  injunctive  relief for fraud in the  inducement and breach of an
agreement to provide third-party logistic services at the warehouse facility. In
its  complaint,  the  Company  alleges  that  AMR  Services  misrepresented  its
experience in the warehouse  management  industry and  mismanaged  the Nashville
facility.  The Company is  preliminarily  seeking  damages  from AMR Services in
excess of $10  million.  At the current  time,  very little  discovery  has been
completed  and an  evaluation  of the  likelihood  of success in the  litigation
cannot be made.

     On October 11, 1997, AMR Services instituted  litigation in Tennessee state
court alleging breach of contract arising from the Company's  termination of the
third-party  logistics  agreement.  In this action, AMR Services has also sought
possession  of certain  records and  computer  data which were  generated at the
warehouse  facility.  This case has been removed to the United  States  District
Court,  Middle  District  of  Tennessee.  AMR  Services  is  seeking  damages of
approximately  $1,686,000.  At the current time, very little  discovery has been
completed  and an  evaluation  of the  likelihood  of success of the  litigation
cannot be made.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.

                                        4

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company's  Common Stock is traded on the New York Stock  Exchange under
the symbol  "JSI".  Prior to February 20,  1997,  the stock was traded under the
symbol  "WON".  The following  table  reflects the range of high and low selling
prices of the Company's Common Stock by quarter over the past two fiscal years.

              FISCAL 1996              HIGH             LOW
             -------------            ------           -----
             First Quarter             8.250           4.250
             Second Quarter           10.500           6.625
             Third Quarter             9.875           6.750
             Fourth Quarter           10.125           6.000

              FISCAL 1997              HIGH             LOW
             -------------             -----           -----
             First Quarter             6.750           4.375
             Second Quarter            4.875           2.750
             Third Quarter             4.063           3.000
             Fourth Quarter            3.250           1.000

     The Company did not pay any dividends during the last two fiscal years (see
Management's  Discussion & Analysis - Liquidity and Capital Resources  regarding
dividend  prohibitions).  The approximate number of stockholders of record as of
January 30, 1998 was 379, and as of that date, the Company  estimates that there
were approximately  4,835 beneficial owners holding stock in nominee or "street"
name.

     There were no unregistered common stock transactions in fiscal 1997.

     During fiscal 1996, certain officers of the Company purchased shares of the
Company's  Common Stock,  which  purchases the Company  facilitated by providing
"stock purchase  assistance  loans" at the then current  federal  long-term rate
(within the meaning of Section 1274 (d) (1) (A) of the Internal  Revenue Code of
1986,  as  amended),   pursuant  to  the  terms  of  such  officers'  employment
agreements.  These stock purchase transactions were as follows: 50,000 shares at
$5.000 per share on April 30,  1996;  30,000  shares at $6.875 per share on June
28, 1996; 6,600 shares at $6.875 per share on August 21, 1996; and 31,000 shares
at $7.375 per share on January 10,  1997.  All of these  sales of the  Company's
Common Stock were exempt from registration under Section 4 (2) of the Securities
Act of 1933.

                                       5

<PAGE>
<TABLE>
<CAPTION>

ITEM 6.  SELECTED FINANCIAL DATA.

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)

                                                    JANUARY 30,     JANUARY 29,     JANUARY 28,      JANUARY 31,     JANUARY 30,
                                                       1994           1995             1996             1997             1998
                                                   ------------    ------------     ------------    ------------    ------------
"Fiscal Year"                                         "1993"          "1994"           "1995"          "1996"          "1997"

<S>                                               <C>              <C>              <C>             <C>             <C> 
STATEMENT OF OPERATIONS DATA:
     Sales                                        $    239,301     $    383,600     $    525,762    $    624,019    $    528,634
     Cost of sales including buying
         and occupancy costs                           177,242          283,908          395,208         505,062         453,509
                                                  ------------     ------------     ------------    ------------    ------------
     Gross profit                                       62,059           99,692          130,554         118,957(1)       75,125(1)
     Selling, general and administrative expenses       42,779           69,207          106,233         124,918         112,489
     Non-recurring and other charges                                                       2,096          22,568          43,055
                                                  ------------     ------------     ------------    ------------    ------------
     Income (loss) from operations                      19,280           30,485           22,225         (28,529)        (80,419)
     Interest expense, net                                 863            4,815           11,254          19,890          30,395
                                                  ------------     ------------     ------------    ------------    ------------
     Income (loss) before provision (benefit)
         for income taxes and extraordinary item        18,417           25,670           10,971         (48,419)       (110,814)
     Provision (benefit) for income taxes                7,101            9,775            3,975         (17,875)            483
                                                  ------------     ------------     ------------    ------------    ------------
     Income (loss) before extraordinary item            11,316           15,895            6,996         (30,544)       (111,297)
     Extraordinary item (less applicable
         income tax benefit)                                               (181)(2)                           
                                                  ------------     ------------     ------------    ------------    ------------
     Net income (loss)                            $     11,316     $     15,714     $      6,996        ($30,544)      ($111,297)
                                                  ============     ============     ============    ============    ============
     Net income (loss) per share
         before extraordinary item                $       0.62(3)  $       0.84(3)  $       0.35(3)       ($1.53)(3)      ($5.47)(3)
     Net income (loss) per share                  $       0.62(3)  $       0.83(3)  $       0.35(3)       ($1.53)(3)      ($5.47)(3)
     Average number of shares outstanding           18,120,103       18,844,412       19,744,013      19,984,993      20,363,299
     Ratio of earnings to fixed charges                   5.96             3.61             1.61             N/M             N/M

SELECTED OPERATING DATA:
     Stores open at end of period                           39               56               80              85              77(4)
     Total gross square feet of store space          1,699,450        2,626,600        3,996,920       4,257,000       3,803,677
     Average gross square feet per store (5)            43,576           46,904           49,962          50,082          49,398
     Comparable store sales increase (6)                   8.0%             9.6%             1.7%            0.1%           (8.8%)
     Capital expenditures                         $     55,331     $     89,610     $     60,738    $     15,236    $     11,164

BALANCE SHEET DATA:
     Working Capital                              $    101,046     $    167,498     $    190,974    $    158,678    $    195,969
     Total assets                                      233,220          389,852          484,843         525,586         466,549
     Long-term debt, less current maturities            78,457          167,703          234,557         294,325         335,557
 Total stockholders' equity                            117,379          180,122          187,530         159,624          48,498
<FN>
----------

(1)  The Company recorded one-time charges to cost-of-sales of $32.4 million in
     fiscal 1996 and $45.0 million in fiscal 1997. See Item 7 - Management's
     Discussion and Analysis of Financial Condition and Results of Operations
(2)  The extraordinary item for the fiscal year ended January 29, 1995 relates
     to early redemption premiums incurred in connection with the prepayment of
     certain liabilities.
(3)  Earnings per share has been restated as required by SFAS No. 128, "Earnings
     Per Share."
(4)  Eighteen stores will close in early fiscal 1998.
(5)  Average gross square feet per store represents the average square feet of
     total store space at the end of
     each fiscal year.
(6)  A store's sales growth is included in the comparable store sales
     calculation after its twelfth full month of operation. The fiscal 1997
     comparable store calculation was adjusted for the below cost clearance sale
     and five additional days of sales which occurred in fiscal 1996.
</FN>
</TABLE>

                                       6

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

     GENERAL

     This  Management's   Discussion  and  Analysis   contains   forward-looking
statements.  These  forward-looking  statements  are  subject  to  the  inherent
uncertainties  in predicting  certain  future  results and  conditions.  Certain
factors could cause actual results to differ  materially from those projected in
these forward-looking statements. These factors include, but are not limited to,
product demand and market  acceptance  risks, the effect of economic  conditions
generally,  the  impact  of  competition,  commercialization  and  technological
difficulties and the condition of the retail and sporting goods industries.

     RESULTS OF OPERATIONS

     The  following  table sets forth  certain data as a percentage of sales for
the periods indicated:

                                                 1995        1996       1997
                                                ------      ------     ------
      Sales                                     100.0%      100.0%     100.0%
      Cost of sales including
        buying and occupancy costs               75.2        80.9       85.8
                                                 ----        ----       ----
      Gross profit                               24.8        19.1       14.2
      Selling, general and
        administrative expenses                  20.2        20.0       21.3
      Non-recurring and other charges               .4        3.7        8.1
                                                 -----      -----      -----
      Income (loss) from operations               4.2        (4.6)     (15.2)
      Interest expense, net                       2.1         3.2        5.8
                                                -----       -----      -----
      Income (loss) before provision (benefit)
        for income taxes                          2.1        (7.8)     (21.0)
      Provision (benefit) for income taxes        0.8        (2.9)       0.1
                                                -----       -----     ------

      Net income (loss)                           1.3%       (4.9)%    (21.1)%
                                                =====       =====      =====


     In the third and fourth  quarters  of fiscal  1997,  the  Company  recorded
non-recurring  charges  related  to  store  closings,  excess  and  slow  moving
inventory,  severance,  outdated  technology  and the write-off of debt costs in
connection  with the Company's  revolving line of credit.  The components are as
follows (in millions):

     Cost of Sales:
          Mark-down of slow moving and excess inventory                $ 17.9
          Additional shrinkage                                            9.5
          Write-down for inventory liquidation of closing stores         17.6
                                                                       ------
                                                                         45.0
     Non-recurring and other charges:
          Charges related to store closings                              40.0
          Other charges                                                   3.0
                                                                       ------
                                                                         43.0
     Depreciation:
          Accelerated depreciation on closing stores                      1.0

     Interest:
          Write-off of deferred debt costs                                5.3
                                                                       ------
     Total                                                             $ 94.3
                                                                       ======

                                       7

<PAGE>

   
     The markdown of excess  inventory  of $17.9  million was taken to correctly
state the value of merchandise at the lower of cost or market. The primary cause
for this  charge  was due to  problems  experienced  in  athletic  footwear  and
apparel;  both  categories  were  impacted  by  distribution  problems,   overly
aggressive  purchasing and soft sales. The Company took physical  inventories in
each of its stores at year-end.  Throughout  the year,  management had estimated
shrinkage at 2.2% of sales.  This  estimate was based on the prior year's actual
shrinkage  of 2.8% and the  industry  average  of 1.5%.  The  year-end  physical
inventories  resulted in a total shrinkage of 4.0% or  approximately  1.8% above
the accrual. The additional  shrinkage is believed to be primarily  attributable
to implementation  issues in connection with the new  merchandising  systems and
problems encountered with the new distribution  facility.  In February 1997, the
Company changed the inventory  distribution  method and inventory  systems.  The
Company  transitioned  the majority of merchandise  flow from direct delivery to
stores,  to a third party managed cross dock facility.  The initial  start-up of
the cross dock facility  caused  significant  product  delays.  Because of these
delays,  the Company  experienced  lost  inventory,  poor sales and  overstocks,
resulting in higher shrinkage and increased  markdowns to alleviate seasonal and
fashion oriented  inventory levels. In October 1997, the Company  terminated its
relationship  with  the  third-party  distribution  manager  and  returned  to a
merchandise flow direct to the Company's stores.  By fiscal year end,  inventory
levels  returned to normal,  and the Company  expects gross margins to return to
historical  levels in 1998.  The Company  installed  new financial and inventory
systems from JDA Software  Group  (JDA).  The systems were  installed to enhance
inventory  control  information  and support the existing  and future  corporate
infrastructure.  As with any new system, conversion issues arose, but the issues
were timely corrected. The new systems gave the Company real-time information to
manage and control inventory levels. Many of the aforementioned causes have been
addressed and management is focused on reducing and controlling shrinkage during
fiscal  1998.  Additionally,  the Company  will be taking  physical  inventories
throughout the year to better estimate the proper shrinkage accrual. The Company
recorded the inventory  write-down of $17.6 million for store closings inventory
liquidation  based on the net realizable  value of  liquidating  inventory at 26
stores   anticipated   to  close  from  January  1998  through  May  1998.   The
establishment of the  aforementioned  reserves did not result in additional cash
payments in fiscal 1997.
    
     The $40.0  million  of  charges  related to store  closings  represent  the
establishment  of reserves of $29.1 million for the  write-down of closed stores
property  and  equipment  to net  realizable  value,  $6.7  million for expenses
attributable  to the  closing  stores and $4.2  million  for lease  reserves  at
closing  locations.  The  establishment  of these  reserves  did not  result  in
additional cash payments in fiscal 1997.

     Other charges of $3.0 million are for severance agreements  attributable to
the administrative and management  workforce  reductions in January 1998 and the
establishment of reserves for outdated  information  communications  technology.
Cash  payments of $0.5 million were made in fiscal 1997 and $2.5 million of cash
payments may be made in future periods.

   
     The  Company  took a  charge  of  $1.0  million  for  the  acceleration  of
depreciation of the closing store  properties.  The Company also accelerated the
write-off of deferred debt costs in  connection  with the  renegotiation  of the
Company's credit facility in the amount of $5.3 million. The deferred debt costs
were loan fees and legal  costs  associated  with the  Company's  former  $185.0
million  revolving  credit  facility  which was revised on January 30, 1998, and
subsequently  refinanced.  The  write-off  of deferred  debt costs were for cash
payments of $3.0 million in fiscal 1997,  $1.0 million in non-cash  payments and
an additional $1.3 million for cash payments to be made in future periods.

                                       8
<PAGE>
     The following  represents  reserve  accounts created for the $55 million in
charges  recorded  in 1996 and the $94  million in charges  recorded in 1997 (in
thousands):
<TABLE>
<CAPTION>
                                                                       1/31/97                                        1/30/98
                               Initial                                 Ending    Reserve                               Ending
Reserve Description           Addition       Reductions    Reclasses   Balance  Addition    Reductions    Reclasses   Balance
-------------------           --------       ----------    ---------   -------  --------    ----------    ---------   --------
<S>                           <C>            <C>           <C>         <C>      <C>         <C>           <C>         <C>
Markdown of slow moving
 and excess inventory                                                           17,928.5      16,100.0                 1,828.5
Write-down for inventory
 liquidation of closing stores                                                  17,538.2       7,348.7                10,189.5
Expenses attributable to
 closing stores                                                                  6,687.7                               6,687.7
Closing store equipment
 reserve                                                                         5,011.5                               5,011.5
Closed store leases                                                              4,221.5        188.9                  4,032.6
Other charges - severance &
 outdated communications
 technology                    1,800.0           841.7                  958.3    3,543.6        720.4                  3,781.5
Disposition and impairment of
 under-performing assets       9,228.7         2,253.7                6,975.0                 5,522.3                  1,452.7

   Reserve Totals             11,028.7         3,095.4                7,933.3   54,931.0     29,880.3                 32,984.0
</TABLE>
    
         In the second quarter of fiscal 1996 the Company recorded one-time
charges of $55.0 million. The components are as follows (in millions):

         Cost of Sales:
             Inventory write-down for shrink
                  and obsolete and slow moving merchandise            $32.4
                                                                      -----
         Non-recurring and other charges:
             Disposition of and impairment of
                 underperforming assets                                11.4
             Charges for certain loss contingencies                     3.0
             Other charges                                              8.2
                                                                      -----
                                                                       22.6
                                                                      -----
         Total                                                        $55.0
                                                                      =====

         The inventory write-down for obsolete and slow moving merchandise and
excess shrinkage of $32.4 million was comprised of a $24.3 million charge for
the write-down of inventory below cost and an additional $8.1 million charge for
merchandise inventory shrinkage. The Company recorded the inventory write-down
to correctly state the value of discontinued, obsolete and slow moving inventory
at a net realizable market value. The inventory for which these reserves were
established was sold during fiscal 1996. Throughout the year, the Company
accrued inventory shrinkage at 1.1% of sales based on prior years' experience.
The excess shrinkage recorded at year-end is believed to be attributable to the
inventory clearance sales and the fact that the Company had taken its first SKU
level inventory. The establishment of these reserves did not result in
additional cash payments.

         The $11.4 million charge for impairment of underperforming assets was
attributable to the write-off of undesirable retail sites and impairment of
other sites of $5.2 million and the write-off of assets as the result of
organizational changes of $6.2 million. The write-off of committed retail sites
was for new store projects that were deemed undesirable. The sites were deemed
undesirable based on proforma operating income projections. The operating income
projections revealed sites which, in the opinion of new management, would not
achieve or maintain the Company's minimum requirements for return on investment.
The charge for impairment of other sites was for nearly-completed retail sites
that were also deemed undesirable based on proforma operating income
projections. The impairment was determined based on the net realizable sale
value of the sites. The establishment of these reserves did not result in
additional cash payments.

         Charges for certain loss contingencies relate to the October 1996
submission of settlement with no admission of liability to the court by the
Company and the plaintiffs in two pending class action suits. The class action
suits asserted claims under the federal securities laws and alleged the Company
artificially inflated the price of its common stock during the class period,
                                       9
<PAGE>
July 14, 1994 through March 13, 1995. By the terms of the settlement, a class
was certified by the court and prorata payments in the total amount of $6.25
million were made to the class members submitting claims. Of this amount, $2.875
million was funded by the Company and the remainder funded by the Company's
insurance carrier.

         Other charges were attributable to costs incurred for severance and
related charges of $1.8 million, employee benefit program charges of $4.3
million and other charges of $2.1 million. Cash payments of $0.9 million were
paid in fiscal 1996 and an additional $0.9 million of cash payments will be made
in future periods.

     FISCAL 1997 COMPARED WITH FISCAL 1996

         During fiscal 1997, the Company announced the closing of 26 stores in
13 states as compared to opening five new stores with no store closings in
fiscal 1996. The Company operated 85 stores for three fiscal quarters and 77
stores for one fiscal quarter, ending fiscal 1997 with 77 operating stores.

         Sales for fiscal 1997 decreased 15.3% to $528.6 million compared with
sales of $624.0 million in the prior year. Same store sales decreased by 14.3%
for fiscal 1997. While these same store sales were unfavorable, management
believes they are not truly comparable because sales in the prior year were
bolstered by the 1996 inventory clearance sale the Company started in June 1996
and continued through November 1996 and the additional five days of sales in
fiscal 1996, fiscal 1996 being a 52 week and five day period. Sales below cost
incurred during the inventory clearance sale were $32.8 million which represents
5.3% of the prior years sales and the additional five days sales totaled $3.5
million. Adjusting same store sales in the prior year for the below cost
clearance sale and the five additional days of sales in fiscal 1996, results in
a comparable sales decrease of 8.8%. Sales have been adversely impacted by the
following:

     1.  New merchandise management systems, installed at the beginning of the
         fiscal year, caused significant disruptions in merchandise flow due to
         problems encountered in receiving and making product ready to sell at
         the store level;
     2.  Operational problems with the Company's distribution center during the
         first eight months of the year caused substantial delays in the flow of
         merchandise creating out of stock conditions for basic merchandise and
         late arrivals of seasonal merchandise;
     3.  Certain merchandise categories were further affected. Outerwear sales
         were lower due to less clearance sales than in the prior year. Fitness
         was lower due to fewer new "informercial"-driven product introductions.
         The footwear category was affected due to the declining in-line skate
         business and general softness in the athletic footwear industry;
     4.  Sales were generally soft throughout the sporting goods retail segment,
         partially as a result of comparisons against last year's Olympic
         merchandise sales and last year's increased foot traffic due to the
         Olympics; and
     5.  Competition continued to increase. Thirty-four additional stores this
         year were affected by new big-box competitors which have opened since
         the beginning of the prior year.

         Gross profit for fiscal 1997 was $75.1 million, or 14.2% of sales, as
compared to $119.0 million, or 19.1% of sales in fiscal 1996. The Company
incurred a $45.0 million inventory write-down charge, or 8.5% of sales related
primarily to slow moving athletic footwear and apparel, excess shrinkage and the
inventory liquidation in connection with the closing of twenty-six stores. In
the prior year, the Company took a charge of $32.4 million, or 5.2% of sales, to
recognize the loss on outdated and discontinued product. The remaining decrease
was attributable to higher buying and occupancy costs as a percentage of sales.

     Selling,  general  and  administrative  expenses  for the fiscal  year were
$112.5  million,  or 21.3% of sales,  compared  to $124.9  million,  or 20.0% of
sales, in the prior year. The increase as a percentage of sales was due to lower
sales volume leverage on fixed costs and certain higher operating costs. Payroll
expense as a  percentage  of sales was up 29 basis  points  due to the  in-store
problems  encountered by the  introduction  of the new  merchandise  information
systems  as  well  as  problems  experienced  in the  implementation  of the new
distribution   center;   also  a  higher   average   wage   resulted   from  the
"ripple-effect"  of the minimum  wage  increase  and a generally  tighter  labor
                                       10
<PAGE>
market.  Advertising  expense as a percentage  of sales was up 121 basis points,
due to additional expenditures for radio and television  advertising,  newspaper
advertising  and the  multi-paged  advertising  books  in  connection  with  the
corporate name change.

         In addition to the $45.0 million inventory charge, the Company incurred
$43.0 million of non-recurring charges, or 8.1% of sales, in the current year's
third and fourth fiscal quarters for charges as discussed above. In the second
quarter of the prior year, the Company recorded a $22.6 million charge, or 3.7%
of sales for the disposition of and impairment of underperforming assets,
charges for certain loss contingencies and other charges.

         Loss from operations in fiscal 1997 was $80.4 million or (15.2)% of
sales, compared to a loss from operations of $28.5 million, or (4.6)% of sales
in fiscal 1996. The loss in the current year was primarily attributable to $89.0
million in charges taken in the third and fourth quarters. The loss in the prior
year was primarily attributable to the $55.0 million in charges taken in the
second fiscal quarter.

         Interest expense for fiscal 1997 was $30.4 million, or 5.8% of sales,
compared to $19.9 million, or 3.2% of sales for the prior fiscal year. This
increase in interest expense was the result of the following:

     1.  Average debt increased due to refinancing the $58.0 million off balance
         sheet Tax Retention Operating Lease facility into the revolving credit
         facility and higher average inventory levels;
     2.  The re-negotiated existing credit facility called for borrowings at
         LIBOR plus 2% (beginning May 29, 1996) and 3.0% (beginning December 15,
         1997) contributing to an overall 81 basis point increase in average
         interest rates; and
     3.  The accelerated write-off of $5.3 million in deferred financing costs
         in connection with the re-negotiation of the Company's existing credit
         facility.

         The Company had $100 million of interest rate collars which impacted
interest expense by $15 thousand and $48 thousand, in fiscal 1996 and fiscal
1997, respectively.

         The Company recorded an income tax expense of $0.5 million in fiscal
1997, the result of writing off the deferred tax asset recorded in the prior
year. In fiscal 1996, the Company recorded an income tax benefit of $17.9
million with an effective tax rate of 36.9%.

         In the current fiscal year, the Company posted a net loss of $111.3
million, or (21.1)% of sales, compared to a net loss of $30.5 million, or (4.9)%
of sales for the prior fiscal year. The net loss for the current year was
primarily attributable to the $94.3 million of charges for store closings,
inventory write-downs and other charges incurred in the third and fourth fiscal
quarters with no federal income tax benefit, resulting in the full amount as a
charge after tax. In the prior year, the net loss was attributable to the $55.0
million charge for inventory, non-recurring and other items incurred in the
second quarter of the prior year reduced by a federal income tax benefit,
resulting in a net charge after tax of $34.6 million.
   
     The Company has reviewed its merchandising strategy and promotional program
to improve its allocation system,  assortment planning,  in-store  presentation,
clearance  policies and  advertising  abilities.  Strong  emphasis on formalized
training  programs and on customer  service are also areas the Company  believes
will enhance operating performance.  The closing of 26 stores and liquidation of
assets in  connection  therewith  is  expected  to  result  in better  operating
efficiencies,  reduced  debt  levels  and  lower  interest  expense.  Management
believes that improved  in-stock  conditions along with a better  assortment and
presentation of softlines merchandise are the key components to improving sales.
In January, the Company began forming a centralized replenishment and allocation
department.  Expectations are that the replenishment  and allocation  department
will  provide  better  managed  inventories  which will improve  sales,  control
inventory investment,  minimize markdowns and reduce store labor expenses.  Each
store will be  re-merchandised  in the  apparel  areas by the fourth  quarter of
fiscal  1998;  this  re-merchandising  is  designed  to provide  better  product
identification  as  well  as to  make it  easier  for  the  customer's  shopping
experience.

     With better sales and  inventory  management,  markdowns are expected to be
lower with improved  gross margins.  Additionally,  the Company has instituted a
program  to manage  inventory  shrinkage  to  acceptable  levels.  By the second
quarter  of fiscal  1998,  forty-three  stores  will have  installed  electronic
                                       11
<PAGE>
article  surveillance  equipment and closed circuit television.  Each store will
retrain on proper receiving techniques.  Accounting procedures and controls will
be  strengthened.  A sample of stores from each district  will conduct  periodic
physical  inventory  counts to monitor  progress.  Shrinkage  awareness  will be
improved throughout the Company.

     Management  believes that with the implementation of the "labor scheduling"
model and enhanced  policies and  procedures,  the Company has begun a change in
organization culture to continue focus on improving operating results.

     The  closing  of 26 stores  and the  liquidation  of  assets in  connection
therewith is expected to result in better operating  efficiencies,  reduced debt
levels and lower  interest  expense.  The store  closings are expected to have a
positive impact on cash flows as the assets are liquidated.
    

     FISCAL 1996 COMPARED WITH FISCAL 1995

     During  fiscal  1996,  the Company  opened  five new stores  compared to 24
opened in fiscal 1995. At the end of fiscal 1996,  the Company  operated a total
of 85 stores in 29 states.

     Sales increased to $624.0  million,  a 19% increase over the $525.8 million
in the prior  year.  Same store  sales  increased  by 0.1%,  with the new stores
contributing  to the  remainder of the total  increase.  The 19.0%  increase was
bolstered by an inventory  clearance  sale the Company  started in the middle of
June 1996 running through November 1996. The purpose of the inventory  clearance
sale was to eliminate  discontinued,  slow moving or obsolete  inventory.  Sales
below cost for the inventory clearance sale were $36.0 million, with an original
inventory cost value of $68.4 million.

     Gross  profit for fiscal  1996 was $119.0  million,  or 19.1% of sales,  as
compared to $130.6  million,  or 24.8% of sales in fiscal 1995.  The decrease in
gross margin percentage is primarily  attributable to an inventory write-down in
the second quarter of $32.4 million, or 5.2% of sales.

     The following table  illustrates the impact of clearance  merchandise sales
and inventory write-down on the reported gross margin:
<TABLE>
<CAPTION>
                                                          DOLLARS IN MILLIONS
                                                 FISCAL 1995                FISCAL 1996
                                                 $         %                $          %
                                              ------     -----           ------      -----
<S>                                           <C>        <C>             <C>         <C>  
         Reported gross margin                $130.6     24.8%           $119.0      19.1%
         Effect of the $32.4 million
             inventory write-down                                          32.4       5.2
         Effect of selling $36.0 million
             of clearance merchandise at
             zero gross profit                                                        1.4
                                              ------     ----            ------      ----
         Adjusted gross margin                $130.6     24.8%           $151.4      25.7%
                                              ======     ====            ======      ====
</TABLE>
     In addition to the $32.4 million inventory write-down, the Company incurred
a  $22.6  million   charge  in  the  second  quarter  of  the  fiscal  1996  for
non-recurring  and other charges  discussed  above.  In fiscal 1995, the Company
incurred   non-recurring  and  one-time  charges  of  $2.1  million  related  to
management changes and the relocation of one store.

     Selling,  general  and  administrative  expenses in fiscal 1996 were $124.9
million,  or 20.0% of sales, as compared to $106.2 million, or 20.2% of sales in
fiscal 1995.  The decrease as a percentage of sales was the result of a 67 basis
point reduction in payroll and payroll related expenses and slight  improvements
in operational  expenses  offset by increases in one-time  administrative  costs
related to the  installation of the new  information  management  system,  a new
labor  scheduling  system,  the centralized  cross-docking  facility and certain
professional fees and relocation expenses associated with personnel additions.
                                       12
<PAGE>
     Loss from operations was $28.5 million,  or 4.6% of sales in fiscal 1996 as
compared to income from operations of $22.2 million,  or 4.2% of sales in fiscal
1995.  The loss in the  current  year is  attributable  to the $55.0  million in
charges discussed above.

     The Company's net interest expense  increased to $19.9 million,  or 3.2% of
sales,  in fiscal 1996,  from $11.3 million,  or 2.1% of sales,  in fiscal 1995.
Approximately  one-third  of the  increase  was the result of lower  capitalized
interest and two-thirds was the result of increased  borrowings on the Company's
revolving credit facility.  The primary reason for increased  borrowings was due
to the  refinancing  of an  off-balance  sheet  lease  facility  (Tax  Retention
Operating Lease) into the Company's  revolving credit facility.  The Company had
also entered into $100 million of interest rate collars which impacted  interest
expense in fiscal 1996 by $15 thousand.

     For fiscal 1996 the Company's income tax benefit was $17.9 million, with an
effective  tax benefit rate of 36.9%,  compared to a tax expense of $4.0 million
with an effective tax rate of 36.2% in the prior year.

     The  Company  posted a net loss of $30.5  million,  or (4.9)% of sales,  as
compared to net income of $7.0  million,  or 1.3% of sales,  in the prior fiscal
year.  The net loss for the current year was  attributable  to $55.0  million of
charges  as  discussed  above,  resulting  in a net  charge  after-tax  of $34.6
million.

     ACCOUNTING STANDARDS

     In February  1997,  the  Financial  Accounting  Standards  Board (the FASB)
issued Statement of Financial  Accounting  Standards No. 128, Earnings Per Share
(SFAS128). SFAS128 is designed to improve the EPS information by simplifying the
computational  guidelines,  revising the disclosure  requirements and increasing
the comparability of EPS data on an international  basis similar to the standard
recently issued by the International  Accounting  Standards  Committee  entitled
International Accounting Standards, Earnings Per Share (IAS33). SFAS128 requires
dual presentation of basis and diluted EPS and a reconciliation of the numerator
and denominator used in computing basic and diluted EPS. Management has restated
earnings per share in accordance with SFAS 128.

     In June  1997,  the FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
Income"  which is effective  for periods  ending after  December 15, 1998.  This
statement  establishes  standards  for  computing  and  presenting  income which
includes  translation  adjustments.  In June 1997,  FASB  issued  SFAS No.  131,
"Disclosures about Segments of an Enterprise and Related  Information," which is
also  effective  for periods  ending after  December 15,  1998.  This  statement
establishes additional disclosure requirements for business segments.

     Management  does not believe the future  period  impact of SFAS No. 130 and
131  on  the  Company's  presentation  of  results  of  operations,  changes  in
stockholders' equity and segment disclosure will result in a material change.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company's  primary  capital  requirements  have been to support capital
investment for the opening of new stores, to purchase  inventory for new stores,
to  meet  seasonal  working  capital  needs,  and to  retire  indebtedness.  The
Company's  working  capital  needs have been  funded  through a  combination  of
external financing (including long-term debt and proceeds from the Company's IPO
in 1992, proceeds from the issuance of 4 1/4% Convertible  Subordinated Notes in
1993,  proceeds  from a two million  share stock  offering in 1994 and  mortgage
proceeds in 1996 and 1997),  internally  generated  funds and credit  terms from
vendors.  Historically,  the Company's  working capital needs peak in the fourth
quarter.
   
     In 1997,  the  Company  began  actively  marketing  real  estate for stores
scheduled to close, undesirable retail sites and surplus property. During fiscal
1997, the Company completed the sale of seven properties  totaling $5.1 million.
These  proceeds were used to reduce bank debt. At 1997 year end, the Company had
41 properties,  $107.5 million, available for sale of which 25 properties, $78.8
                                       13
<PAGE>
million,  were under  contract or letter of intent to be sold. The proceeds from
the  sale of  these  properties  will be used to  reduce  the  revolving  credit
facility and mortgage debt, lowering future interest expense and debt service.
    
     Operating  activities in fiscal 1997 used cash of $34.5 million compared to
cash  provided  of $13.2  million  in fiscal  1996.  The  higher use of cash was
primarily due to excess  merchandise  purchases  resulting  from  implementation
issues with the new merchandising  system and the new distribution  facility and
to certain  over-reactions  to  out-of-stock  inventory  positions.  By year-end
product returns were  completed,  future orders had been adjusted and an orderly
sell down plan  initiated.  Controls  have been  instituted to ensure that these
conditions do not recur. Merchandise levels were similar to prior year levels at
year-end.

     Net cash of $6.0 million was used in  investing  activities  during  fiscal
1997 compared to $11.8  million net cash used in investing  activities in fiscal
1996.  The primary  reasons for the  decrease  are due to higher  proceeds  from
property  sales in fiscal  1997  compared  to fiscal  1996 and  because  capital
expenditures in 1997 related to store signage for the name change to JumboSports
were less than the capital expenditures in fiscal 1996 for the completion of new
stores.

     Cash flows  provided by financing  activities  were $35.9 million in fiscal
1997 as compared  to $25  thousand  used in fiscal  1996.  The  increase in cash
provided  by  financing  activities  in  fiscal  1997 was  primarily  due to the
completion of $72.4 million of mortgage  financings  offset by repayments  under
the revolving credit facility.

     As of January 30, 1998,  the Company had $2.8 million of long-term  capital
lease  obligations,  $85.0  million of  long-term  mortgage  obligations,  $74.8
million  of 4  1/4%  Convertible  Subordinated  Notes,  and  $174.0  million  of
borrowings under its $180 million  revolving  credit facility.  The $180 million
credit facility matures May 1999 and contains  customary events of default and a
number of  customary  covenants,  including  restrictions  on liens and sales of
assets,  prohibitions  on  dividends  and  certain  changes  in  control,  and a
maintenance of two financial  ratios. As of January 30, 1998, the Company was in
compliance with all bank covenants.

     The revolving  credit facility bears interest on outstanding  balances,  at
the Company's option, at the lender's prime rate plus 2%, or at LIBOR plus 3%.
   
     The inventory  liquidation of eight stores in 1997 and 18 stores in 1998 in
conjunction  with the sale of surplus and closed  store real estate will provide
substantial cash funds for the repayment of debt. The repayment of debt from the
inventory liquidation and real estate sales will materially reduce the Company's
interest expense in future periods. The Company's credit facility has provisions
permitting the Company to complete the aforementioned transactions and remain in
compliance with the facility's covenants.

     The Company's total  anticipated  capital  expenditures  are expected to be
less  than  $7.7  million  for  fiscal  1998  (including  amounts  for new store
expansion,  improvements  in existing  stores and other  capital  expenditures).
Management  believes  that its  current  cash  position  together  with  amounts
available  under its $180 million  revolving  credit  facility,  certain leasing
commitments net cash provided through the inventory liquidation at the Company's
closing  stores,  net cash  provided  through  real  estate  sales  and net cash
provided by operating  activities will be sufficient to fund anticipated capital
expenditures and working capital requirements for the upcoming year.

     YEAR 2000 COMPLIANCE

     The Company has developed a plan addressing the possible  exposures related
to the  impact  of the Year 2000 on its  computer  systems  and  non-information
technology  systems.  In the spring of 1997,  the Company  replaced  all of its
application  software from IBM, Microsoft and JDA Software Group (JDA). With the
implementation  of one  application  programming  update  from JDA,  JumboSports
believes it will complete its Year 2000 compliance in key financial, information
and operating  systems.  The application of the JDA update will require thorough
testing of every  application at  JumboSports.  The Company is in the process of
reviewing all  non-information  technology systems for Year 2000 compliance.  At
this point the Company  does not believe  there will be any  material  impact on
operations.  The Company expects to complete the Year 2000 compliance testing in
the second half of fiscal 1998.  Risks for the Company  regarding  the Year 2000
issue relate to  compliance  by its vendors.  Should a majority of the Company's
                                       15
<PAGE>
major vendors have difficulties associated with the Year 2000 issue, the Company
could experience a material adverse financial impact. The Company currently does
not have a contingency plan in the event its vendors' systems do not function in
the Year 2000.  The Company is  considering  the  creation  of a plan,  which if
necessary, would be in place by the second half of 1999. The financial impact of
making  required  information  systems changes is not expected to be material to
the Company's  consolidated  financial  position,  results of operations or cash
flows.
    
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The Company does not believe there is material market risk.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The information called for by this item is set forth as an exhibit to
this Form 10-K.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         Coopers & Lybrand L.L.P. ("Coopers & Lybrand") served as the
accountants for the fiscal year ended January 30, 1998, and the Board of
Directors has reappointed them to act as the public accountants for the fiscal
year ending January 29, 1999. Previously, the firm of Deloitte & Touche LLP
("Deloitte & Touche") served as the Company's independent accountants for the
fiscal year ended January 28, 1996. Deloitte & Touche did not resign, decline to
be reappointed, nor did its report on the Company's financial statements for
fiscal 1995 or fiscal 1994 contain an adverse opinion, disclaimer of opinion,
qualification or modification. Furthermore, the Company did not experience any
disagreements with Deloitte & Touche on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.

         The decision to change accountants and the selection of Coopers &
Lybrand was recommended by the Audit Committee and approved by the Board of
Directors in fiscal 1996.

         A representative of Coopers & Lybrand is expected to be present at the
Annual Meeting of Stockholders and will have the opportunity to make a
statement, if Coopers & Lybrand so elects, and to respond to appropriate
questions from stockholders.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         (a)  Directors: The information required by this Item is incorporated
              herein by reference to "Election of Directors-Certain Information
              Regarding Director Nominees" on pages 4 and 5 of the Company's
              1998 Proxy Statement
         (b)  Executive Officers and Significant Employees of the Registrant:
              The information required by this Item is incorporated herein by
              reference to "Executive Officers of the Company" on page 7 of the
              Company's 1998 Proxy Statement.
         (c)  Compliance with Section 16(a) of the Securities Exchange Act of
              1934: The information required by this Item is incorporated herein
              by reference to "Section 16(a) Beneficial Ownership Reporting
              Compliance " on page 14 of the Company's 1998 Proxy Statement.

                                       15
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION.

         The information required by this Item is incorporated herein by
reference to "Additional Information Concerning Directors-Directors' Fees" on
page 6, and "Executive Compensation" on pages 8 through 10, of the Company's
1998 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information required by this Item is incorporated herein by
reference to "Security Ownership of Certain Beneficial Owners and Management" on
pages 2 and 3 of the Company's 1998 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information required by this Item is incorporated herein by
reference to "Certain Relationships and Related Transactions" on page 14 of the
Company's 1998 Proxy Statement.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(A) DOCUMENTS FILED AS PART OF THIS ANNUAL REPORT ON FORM 10-K:

     (1)  FINANCIAL STATEMENTS
                                                                          PAGE
                                                                          ----
     Reports of Independent Accountants....................................F1
     Consolidated Balance Sheets...........................................F3
     Consolidated Statements of Operations.................................F4
     Consolidated Statements of Stockholders' Equity.......................F5
     Consolidated Statements of Cash Flows.................................F6
     Notes to the Consolidated Financial Statements........................F7

     (2) ALL SCHEDULES HAVE BEEN INCLUDED AS AN EXHIBIT OR THE INFORMATION IS
         INCLUDED ELSEWHERE IN THE FINANCIAL STATEMENTS OR NOTES THERETO
         INCORPORATED BY REFERENCE IN ITEM 8 OF THIS ANNUAL REPORT ON FORM 10-K.

     (3)  EXHIBITS - SEE EXHIBIT  INDEX ON PAGE 17.

(B)   REPORTS ON FORM 8-K:

     No reports on Form 8-K were filed by the Registrant during the quarter
ended January 30, 1998.

                                       16

<PAGE>


                                  EXHIBIT INDEX

EXHIBIT
NUMBER        DESCRIPTION
------        -----------

              Financial Statements - see index on page 15. Financial Statement
              Schedules - see index on page 15.
3.1           Articles of Incorporation of JumboSports Inc.
   
3.2           Bylaws of JumboSports Inc. - Incorporated by reference to the
              exhibits included in the Company's Annual Report on Form 10K/A
              filed on March 12, 1998.
    
4.1           Specimen Common Stock Certificate.
4.2           Specimen of Debt Security.
4.3           Indenture between JumboSports Inc. and Barnett Banks Trust
              Company, National Association, as Trustee. Incorporated by
              reference to exhibits included in the Company's Annual Report on
              Form 10-K/A for the fiscal year ended January 30, 1994.
4.4           Supplemental Indenture Agreement, dated February 14, 1997, between
              JumboSports Inc. and The Bank of New York. Incorporated by
              reference to the exhibits included in the Company's Form 8-B filed
              on June 11, 1997.
4.5           Rights Agreement, dated June 12, 1996, between JumboSports Inc.
              and ChaseMellon Shareholder Services, LLC. Incorporated by
              reference to the exhibits included in the Company's Form 8-A filed
              on June 20, 1996.
4.6           Rights Certificate. Incorporated by reference to the exhibits
              included in the Company's Form 8-A filed on June 20, 1996.
10.1          1989 Stock Incentive Plan, as amended through June 23, 1994.
              Incorporated by reference to exhibits included in the Company's
              Annual Report on Form 10-K for the fiscal year ended January 29,
              1995.
10.2          Amendment to 1989 Stock Incentive Plan. Incorporated by reference
              to the exhibits included in the Company's Form S-8 Registration
              Statement filed on January 28, 1998 (Registration No. 333-45041).
10.3          1996 Stock Incentive Plan. Incorporated by reference to the
              exhibits included in the Company's Form 8-B filed June 11, 1997.
10.4          Employment Agreement, dated April 15, 1996, between JumboSports
              Inc. and Raymond P. Springer.
10.5          Consulting Agreement, dated January 16, 1998, between JumboSports
              Inc. and Jack E. Bush.
10.6          Officers' Medical Reimbursement Plan. Incorporated by reference to
              exhibits included in the Company's Registration Statement on Form
              S-1 (Registration Statement No. 33-50098).
10.7          Amended and Restated Credit Agreement, dated as of May 28, 1997,
              among JumboSports, each of the subsidiaries of JumboSports,
              Barnett Bank, N.A., NationsBank, N.A., and each of the Lenders (as
              defined in the Amended and Restated Credit Agreement).
10.8          Form of Stock Option Agreement pursuant to the 1989 Stock
              Incentive Plan for options granted to employees.
10.9          Form of Stock Option Agreement pursuant to the 1996 Stock
              Incentive Plan for options granted to Directors.
10.10         Employee Stock Purchase Plan, as amended through November 14,
              1994. Incorporated by reference to exhibits included in the
              Company's Annual Report on Form 10-K for the fiscal year ended
              January 29, 1995.
10.11         Amendment Agreement, dated January 30, 1998, among JumboSports
              Inc., Barnett Bank, N.A., NationsBank, N.A., and each of the
              lenders (as defined in the Amendment Agreement). Incorporated by
              reference to exhibits included in the Company's Form 8-K filed on
              February 10, 1998.
12            Computation of Ratio of Earnings to Fixed Charges.
21            List of Subsidiaries. Incorporated by reference to exhibits
              included in the Company's Annual Report on Form 10-K for the
              fiscal year ended January 28, 1996.
23.1          Consent of Coopers & Lybrand L.L.P.
23.2          Consent of Deloitte & Touche LLP.
27            Financial Data Schedule (Edgar filing-only)
99            Schedule II - Valuation and Qualifying Accounts.

                                       17

<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, on April 24, 1998.

                                                 JumboSports Inc.
                                                    (Registrant)

                                         By: /s/ JACK E. BUSH
                                            ---------------------------------
                                         Jack E. Bush, Chairman of the Board,
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated above.

                                         By: /s/ JACK E. BUSH
                                            ---------------------------------
                                         Jack E. Bush, Chairman of the Board,
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)

                                         By: /s/  RAYMOND P. SPRINGER
                                            ---------------------------------
                                         Raymond P. Springer, Executive Vice
                                         President and Chief Financial Officer

                                         By: /s/ JEROME A. KOLLAR
                                            ---------------------------------
                                         Jerome A. Kollar, Principal Accounting
                                         Officer

                                         By: /s/ HAROLD F. COMPTON
                                            ---------------------------------
                                         Harold F. Compton,  Director

                                         BY: /s/ R. DON MORRIS
                                            ---------------------------------
                                         R. Don Morris, Director

                                         By: sS/ SAMUEL NORTHROP, JR.
                                            ---------------------------------
                                         Samuel Northrop, Jr.,  Director

                                         By: /s/ STEVEN A. RAYMUND
                                            ---------------------------------
                                         Steven A. Raymund,  Director

                                         By: /s/ RONALD L. VAUGHN
                                            ---------------------------------
                                         Ronald L. Vaughn,  Director

                                       18

<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders of JumboSports Inc.

We have audited the accompanying consolidated balance sheets of JumboSports Inc.
and subsidiaries (the "Company") as of January 31, 1997 and January 30, 1998 and
the related consolidated statements of operations, stockholders' equity and cash
flows for the two years in the period ended January 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of January 31, 1997 and January 30, 1998 and the consolidated results
of its operations and its cash flows for the two years in the period ended
January 30, 1998, in conformity with generally accepted accounting principles.


                                                        COOPERS & LYBRAND L.L.P.

Tampa, Florida
April 10, 1998

                                      F-1

<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders of JumboSports Inc.

We have audited the statements of income, stockholders' equity and cash flows of
JumboSports Inc. (the "Company") for the year ended January 28, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements of the Company present fairly, in all
material respects, the results of its operations and its cash flows for the year
ended January 28, 1996, in conformity with generally accepted accounting
principles.


                                                           DELOITTE & TOUCHE LLP

Tampa, Florida
March 22, 1996

                                      F-2

<PAGE>
<TABLE>
<CAPTION>

                                JUMBOSPORTS INC.
                           CONSOLIDATED BALANCE SHEETS

               (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)

                                                                       JANUARY 31,  JANUARY 30,
ASSETS                                                                    1997          1998
                                                                       -----------  -----------
<S>                                                                     <C>         <C>
    Current assets:
       Cash and cash equivalents                                        $   4,944     $     345
       Accounts receivable, net                                             2,338         4,654
       Inventories                                                        201,090       185,047
       Property under contract for sale                                                  78,801
       Prepaid expenses and other assets                                    4,495         3,819
       Income tax receivable                                               11,386         1,556
       Deferred tax asset                                                   1,586            
                                                                        ---------     ---------
               Total current assets                                       225,839       274,222
                                                                        ---------     ---------
    Property held for sale                                                               28,712
    Property and equipment, net                                           282,651       145,747
    Other assets:
       Cost in excess of fair value of net assets acquired, net            11,145        10,803
       Other                                                                5,951         7,065
                                                                        ---------     ---------
               Total other assets                                          17,096        17,868
                                                                        ---------     ---------
    Total assets                                                        $ 525,586     $ 466,549
                                                                        =========     =========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
       Current portion of long-term debt                                $     185     $   1,008
       Accounts payable                                                    37,050        26,443
       Accrued expenses                                                    16,462        13,717
       Accrued non-recurring charges                                        7,891        32,984
       Other                                                                5,573         4,101
                                                                        ---------     ---------
               Total current liabilities                                   67,161        78,253

       Deferred rent and other long-term liabilities                        4,476         4,241
       Revolving credit agreement                                         203,995       174,037
       Long-term debt less current maturities                              15,580        86,770
       Convertible subordinated notes                                      74,750        74,750
                                                                        ---------     ---------
               Total liabilities                                          365,962       418,051
                                                                        ---------     ---------
    Commitments and contingencies (Notes 3 and 6)

    Stockholders' equity:
       Common stock, $.01 par value, 100,000,000 shares authorized,
       20,339,409and 20,386,155 shares issued and outstanding,
       respectively                                                           203           204
    Additional paid-in capital                                            149,639       149,809
    Accumulated earnings (deficit)                                          9,782      (101,515)
                                                                        ---------     ---------
               Total stockholders' equity                                 159,624        48,498
                                                                        ---------     ---------
    Total liabilities and stockholders' equity                          $ 525,586     $ 466,549
                                                                        =========     =========
</TABLE>

See Notes To The Consolidated Financial Statements.

                                      F-3

<PAGE>
<TABLE>
<CAPTION>
                                JUMBOSPORTS INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                    (IN THOUSANDS EXCEPT FOR PER SHARE DATA)

                                                               FISCAL           FISCAL         FISCAL
                                                                1995             1996           1997
                                                             ---------        ---------       ---------
<S>                                                          <C>              <C>             <C>     
    Sales                                                     $525,762         $624,019        $528,634
    Cost of sales including buying
       and occupancy costs                                     395,208          505,062         453,509
                                                             ---------        ---------       ---------
    Gross profit                                               130,554          118,957          75,125

    Selling, general and administrative expenses               106,233          124,918         112,489
    Non-recurring and other charges                              2,096           22,568          43,055
                                                            ----------       ----------      ----------
    Income (loss) from operations                               22,225          (28,529)        (80,419)
    Interest expense, net                                       11,254           19,890          30,395
                                                             ---------       ----------      ----------
    Income (loss) before provision (benefit) for
       income taxes                                             10,971          (48,419)       (110,814)
    Provision (benefit) for income taxes                         3,975          (17,875)            483
                                                            ----------        ---------   -------------
    Net income (loss)                                        $   6,996        $ (30,544)      $(111,297)
                                                             =========        =========       ==========

    Basic and dilutive earnings per common share                 $0.35          $(1.53)          $(5.47)
</TABLE>

See Notes To The Consolidated Financial Statements.

                                      F-4

<PAGE>
<TABLE>
<CAPTION>
                                JUMBOSPORTS INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                      (IN THOUSANDS EXCEPT FOR SHARE DATA)

                                                 COMMON STOCK          ADDITIONAL
                                          -------------------------     PAID-IN         ACCUMULATED
                                            SHARES        PAR VALUE     CAPITAL      EARNINGS (DEFICIT)     TOTAL
                                          ----------      ---------    ----------    ------------------    --------
<S>                                       <C>             <C>            <C>            <C>                <C>     
Balance, January 29, 1995                 19,722,917      $    197       $146,595       $   33,330         $180,122
    Issuance of common stock                  46,142             1            294                               295
    Tax benefit of exercise of options                                        117                               117
    Net income                                                                               6,996            6,996
                                          ----------      --------       --------       ----------         --------

Balance, January 28, 1996                 19,769,059           198        147,006           40,326          187,530
    Issuance of common stock                 570,350             5          1,600                             1,605
    Tax benefit of exercise of options                                      1,033                             1,033
    Net loss                                                                               (30,544)         (30,544)
                                          ----------      --------       --------       ----------         --------

Balance, January 31, 1997                 20,339,409           203        149,639            9,782          159,624
    Issuance of common stock                  46,746             1            157                               158
    Tax benefit of exercise of options                                         13                                13
    Net loss                                                                              (111,297)        (111,297)
                                          ----------      --------       --------       ----------         --------

Balance, January 30, 1998                 20,386,155      $    204       $149,809       $ (101,515)        $ 48,498
                                          ==========      ========       ========       ===========        ========
</TABLE>

See Notes To The Consolidated Financial Statements.

                                       F-5

<PAGE>
<TABLE>
<CAPTION>

                                JUMBOSPORTS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

                                                                           FISCAL          FISCAL           FISCAL
                                                                            1995            1996            1997
                                                                         ----------      ----------       ---------- 
<S>                                                                      <C>             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                       $    6,996      $  (30,544)       $(111,297)
Adjustments to reconcile net income (loss)  to net cash provided by
     (used in) operating activities:
       Depreciation                                                          6,258           8,656            9,840
       Gain (loss) on asset sales                                             (179)           (478)              11
       Amortization of cost in excess of the fair value of
          net assets acquired                                                  342             342              342
       Deferred loan cost and other amortization                               509           1,048            1,456
       Deferred loan cost write off                                                                           5,345
       Non-recurring and other charges                                       2,096          22,568           43,055
       Decrease (increase) in deferred tax asset                                            (1,586)           1,586
       Increase (decrease) in deferred income tax liability                  1,255          (4,388)
       Decrease (increase) in accounts receivable                             (595)          2,589           (2,316)
       Decrease (increase) in inventories                                  (42,548)         35,144           16,043
       Increase in prepaid expenses and other assets                          (483)         (2,000)             (77)
       Decrease (increase) in income tax receivable                                        (11,386)           9,830
       Decrease (increase) in other assets                                     235          (1,818)             391
       Increase (decrease) in accounts payable                              14,161          (7,278)         (10,607)
       Increase (decrease) in accrued expenses                               1,455            (133)          (3,281)
       Increase (decrease) in other current liabilities                      2,472            (300)           5,100
       Increase in deferred rent and other long term liabilities               273           2,380               82
       Increase (decrease) in income taxes payable                          (1,029)            398
                                                                        ----------      ----------       ---------- 
          Net cash provided by (used in) operating activities               (8,782)         13,214          (34,497)
                                                                        ----------      ----------       ----------   
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                  (60,738)        (15,236)         (11,164)
     Sale leaseback proceeds                                                                 2,150
     Net collections under note receivable                                     462              31               16
     Cash proceeds from sale of property                                       429           1,220            5,143
                                                                        ----------      ----------       ---------- 
          Net cash used in investing activities                            (59,847)        (11,835)          (6,005)
                                                                        ----------      ----------       ----------    
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of common stock, net                                   295           1,600              158
     Tax benefit of options exercised                                          117           1,033               13
     Net payments (borrowings) under stock purchase plan                                      (482)             132
     Proceeds from mortgage financing                                                       13,039           72,425
     Net borrowings under revolving credit agreement                        67,279          24,595           42,467
     Net repayments under revolving credit agreements                                      (35,660)         (72,425)
     Repayments of long term debt                                             (376)           (578)            (746)
     Loan and other financing costs                                                         (3,572)          (6,121)
                                                                        ----------      ----------       ---------- 
          Net cash provided by (used in) financing activities               67,315             (25)          35,903
                                                                        ----------      ----------       ----------

     Net increase (decrease) in cash and cash equivalents                   (1,314)          1,354           (4,599)
                                                                        ----------      ----------       ----------  
     Cash and cash equivalents, beginning of period                          4,904           3,590            4,944
                                                                        ----------      ----------       ----------  
     Cash and cash equivalents, end of period                           $    3,590      $    4,944       $      345
                                                                        ==========      ==========       ==========

Supplemental Disclosure Cash Flow Information Cash paid during year for:

       Interest (net of amounts capitalized)                            $   10,589      $   19,482       $   24,997
       Income taxes                                                     $    3,749      $       40       $       44
</TABLE>

See Notes To The Consolidated Financial Statements.

                                      F-6

<PAGE>


                                JUMBOSPORTS INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS EXCEPT FOR SHARE, PER SHARE DATA AND AS OTHERWISE NOTED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION

         JumboSports Inc. and its subsidiaries (the "Company"), previously
Sports & Recreation, Inc., operated 85 retail sporting goods outlets in 29
states. In fiscal 1997 the Company announced the closings of 26 stores. On
January 31, 1998 the Company will operate 59 stores in 23 states.

     PERIODS PRESENTED

         In fiscal 1996, the Company changed to utilizing a 52 or 53 week fiscal
year ending on the Friday closest to the end of January, as compared to a 52 or
53 week fiscal year ending on the Sunday closest to the end of January. This
change in fiscal year caused fiscal year 1996 to be a 52 week and five day
period. The financial statements presented are for the 52 week period ended
January 28, 1996 ("fiscal 1995"), for the 52 week and five day period ended
January 31, 1997 ("fiscal 1996") and for the 52 week period ended January 30,
1998 ("fiscal 1997").

     PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of
JumboSports Inc. and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.

     BASIS OF ACCOUNTING

         The use of estimates is inherent in the preparation of financial
statements in accordance with generally accepted accounting principles.

     CASH EQUIVALENTS

         The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.

     INVENTORIES

         Inventories are stated at the lower of first-in, first-out (FIFO) cost
or market for fiscal 1996 and for fiscal 1997 at the lower of cost (computed
using the FIFO retail method) or market. The Company believes that the FIFO
retail method provides improved information for the operation of its business in
a manner consistent with the method used widely in the retail industry. The
cumulative effect of the change to the FIFO retail method was immaterial.
Proforma effects of the change for prior periods is not determinable. The
Company considers cost to include the direct cost of merchandise, plus internal
costs associated with merchandise procurement, storage, handling, and
distribution. Selling, general and administrative costs capitalized into ending
inventory were $5,128 and $4,128 in fiscal 1996 and fiscal 1997, respectively.

     PROPERTY AND EQUIPMENT

         Property is recorded at cost and includes interest on funds borrowed to
finance construction. Capitalized interest was approximately $2,476, $135 and
$221 in fiscal 1995, fiscal 1996 and fiscal 1997, respectively. Depreciation and
amortization are provided using the straight-line method over the estimated
useful service lives of the related assets. Costs and related accumulated
depreciation on assets retired or disposed of are removed from the accounts and
any gains or losses resulting therefrom are credited or charged to operations.

     INCOME TAXES

         The Company provides for federal and state income taxes currently
payable as well as for those deferred because of timing differences between
reporting income and expenses for financial statement purposes and income and
expenses for tax purposes. Work Opportunity Tax credits were recorded as a
reduction of income taxes.

                                      F-7
<PAGE>
         The Company uses the provisions of Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes". SFAS 109 requires
an asset and liability approach in accounting for income taxes. Under the asset
and liability method, deferred tax assets and liabilities are recognized for
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The Company's
differences relate primarily to the difference in carrying values of certain
assets and liabilities for book and tax reporting and the deferred income tax
asset resulting from the Company's non-recurring restructuring charges. Under
SFAS 109, the effective rate on deferred tax assets and liabilities of a change
in tax rates is recognized as income or expense in the period that includes the
enactment date.

     ADVERTISING COSTS

         Advertising costs are expensed the first time advertising takes place.
Included in selling, general and administrative expenses for fiscal 1995, fiscal
1996 and fiscal 1997 are $10,420, $13,309 and $17,498, respectively, of
advertising expenses.

     DEFERRED LOAN CHARGES

         Deferred loan charges represent fees paid in connection with the
acquisition of certain of the Company's debt. These charges are being amortized
using the interest method over the term of the related debt. Net deferred loan
costs were $2,225, $2,217 and $3,140 in fiscal 1995, fiscal 1996 and fiscal
1997, respectively.

     IMPAIRMENT OF ASSETS

         SFAS 121, "Accounting for Impairment of Long-Lived Assets to be
Disposed of", requires that long-lived assets and certain intangibles to be held
and used by the Company be reviewed for impairment. In conducting its review,
management considers, among other things, its current and expected operating
cash flows together with a judgment as to the fair value the Company could
receive upon sale of its investment. Based on this review, the Company recorded
a $5,229 pre-tax charge as part of the $22,568 charge it took in the second
quarter of fiscal 1996. In fiscal 1997 the Company recorded charges of $21,185
for the write-down to net realizable values for closing stores.

   
     Although the Company  adopted SFAS 121 in fiscal 1996,  the Company did not
realize an impairment of  long-lived  assets until the second  quarter of fiscal
1996 because of the corporate  philosophy change from rapid expansion and growth
to individual store profitability and contribution  measurements.  The change in
philosophy  came about due to the  management  change during  February 1996. New
management changed the focus  concentrating on building  infrastructure in order
to support successful and profitable store expansion.  To accomplish this, third
party  consulting  groups were  retained  to build a real estate site  selection
model projecting  revenues based on the Company's customer base and demographics
for the existing and future store sites. With the developed model's information,
the Company used the revenue  projections  to determine if the potential  future
sites under  development at the time, would meet the Company's minimum return on
investment.  This  allowed  the Company to  segregate  the assets to be held and
used,  and to be disposed of. The analysis  completed  during the second  fiscal
quarter of 1996  showed that the  impairment  was for sites that were not opened
and charges pertaining to SFAS 121 were recognized accordingly.  The Company has
completed the analysis on a periodic basis, and has made determinations to close
stores and impair the assets  relating to those  stores,  as evidenced in fiscal
1997.
    
     COST IN EXCESS OF  FAIR VALUE OF NET ASSETS ACQUIRED

         Goodwill, which represents the excess of purchase price over fair value
of net assets acquired, is amortized on a straight-line basis over a 40 year
period. Accumulated amortization was $2,520 and $2,862 as of January 31, 1997
and January 30, 1998, respectively.

     FAIR VALUES OF FINANCIAL INSTRUMENTS

         The carrying value of the Company's cash, receivables, accounts
payable, revolving credit agreement, and long term debt approximate their fair
values. The fair value of the convertible subordinated notes was approximately
$55,000 and $31,000 on January 31, 1997 and January 30, 1998, respectively,
based upon current market rates.
                                      F-8
<PAGE>
     TOTAL INTEREST EXPENSE AND RISK MANAGEMENT INSTRUMENTS

         Total interest expense incurred was $13,877, $29,092 and $30,928 for
fiscal 1995, fiscal 1996 and fiscal 1997, respectively. The Company, in
connection with its revolving credit facility, has entered into $100,000 of
interest rate collar agreements. These agreements qualify for hedge accounting
and are amortized to interest expense. The $100,000 of interest rate collars
impacted interest expense by $15 and $48 in fiscal 1996 and fiscal 1997,
respectively.

         The fair value of the Company's $100,000 of interest rate collar
agreements was $5 at January 30, 1998.

     EARNINGS PER COMMON SHARE

         Earnings per common shares is calculated in accordance with SFAS No.
128, "Earnings Per Share," and is based on the weighted average number of common
shares outstanding during each year as follows:

                                       WEIGHTED AVERAGE
                 YEAR                 SHARES OUTSTANDING
               -----------------------------------------
                Fiscal 1995                19,744,013
                Fiscal 1996                19,984,993
                Fiscal 1997                20,363,299

     ACCOUNTING PRONOUNCEMENTS

         In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which is effective for periods ending after December 15, 1998. This
statement establishes standards for computing and presenting income which
includes translation adjustments. In June 1997, the FASB issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which is
also effective for periods ending after December 15, 1998. This statement
establishes additional disclosure requirements for business segments.

         Management does not feel the future period impact of SFAS No. 130 and
131 on the Company's presentation of results of operations, changes in
shareholders' equity and segment disclosure will result in a material change.

     RECLASSIFICATIONS AND RESTATEMENTS

         Certain fiscal 1995 amounts were reclassified or restated to conform
with the current year presentation.

NOTE 2 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
                                                                                                     ESTIMATED
                                                              JANUARY 31,         JANUARY 30,          USEFUL
                                                                  1997               1998          LIFE(IN YEARS)
                                                            -------------        -------------     --------------
<S>                                                         <C>                   <C>              <C>
       Land                                                    $  100,336          $    90,570
       Buildings                                                  118,454              105,617         15 - 39
       Furniture, fixtures and equipment                           32,694               40,445         3 - 10
       Leasehold improvements                                      44,809               44,085         15 - 39
       Assets held under capital lease                              2,129                2,182           39
       Construction in-process                                      9,739                6,726
                                                             ------------         ------------
               Total property and equipment, cost                 308,161              289,625
       Less accumulated depreciation and amortization              25,510               36,365
                                                              -----------          -----------
               Total property and equipment, net                  282,651              253,260
                                                               ----------           ----------
       Less property under contract for sale                                            78,801
       Less property held for sale                                                      28,712
                                                               ----------         ------------
               Property and equipment, net                      $ 282,651           $  145,747
                                                                =========           ==========
</TABLE>
                                      F-9
<PAGE>
NOTE 3 - REVOLVING CREDIT AGREEMENT

     At January 30, 1998, the Company has a $180,000  secured  revolving  credit
facility which matures on May 31, 1999.  During the term of this agreement,  the
Company is restricted  from declaring or paying any cash  dividends,  making any
other  distributions  on  account  of any class of its stock  (other  than stock
splits or stock  dividends)  or  redeeming,  purchasing,  retiring or  otherwise
acquiring directly or indirectly any shares of its stock,  except for fractional
shares in connection  with stock splits or stock  dividends and shares issued to
employees to exercise outstanding  options.  Interest on this borrowing accrues,
at the  Company's  option,  based  upon the  lender's  prime rate plus 200 basis
points  (10.50% at January 30,  1998) or LIBOR plus 300 basis  points  (8.62% at
January  30,  1998).  Interest  on  advances  under  the prime  rate is  payable
quarterly  in  arrears.  Interest  on LIBOR rate  advances  is fixed and, at the
Company's  option,  is  payable  in  arrears  on 30, 60 or 90 day  periods.  The
revolving credit facility is collateralized by real and personal  property.  The
availability under the revolving credit facility is the lower of $180,000 or the
borrowing base. The borrowing base is a calculation  based upon eligible assets:
real estate,  inventories and equipment.  As of January 31, 1997 and January 30,
1998,  the Company had  $203,995 and  $174,037,  outstanding  respectively,  and
$36,034 and $920, respectively, available under this agreement.

         In conjunction with the revolving credit facility, the Company also
entered into a letter of credit sub-facility maturing on June 4, 1998.
Commitments under the letter of credit are limited to the lesser of $10,000 or
the availability under the revolving line of credit. At January 31, 1997 and
January 30, 1998, outstanding commitments under the letter of credit facility
were $2,065 and $1,006, respectively.

         In conjunction with the revolving credit facility, the Company has
entered into $100,000 of interest rate collar agreements. These agreements hedge
interest rate fluctuations by setting floor rates and ceiling rates on a
notional amount of $100,000. The Company has $50,000 of agreements with floor
rates of 5.23% and ceiling rates of 8.00% and $50,000 of agreements with floor
rates of 5.75% and ceiling rates of 7.50%. All of these agreements terminate on
various dates in calendar year 1998.

         As of January 30, 1998, the Company was in compliance with its credit
facility covenants.

NOTE 4 - LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                JANUARY 31,        JANUARY 30,
                                                                                    1997              1998
                                                                                -----------       -----------
<S>                                                                             <C>               <C> 
     Obligations under real estate capital leases for two store facilities with
       interest imputed at approximately 13.06% and 13.20% per annum. The
       agreements require monthly payments of $31 including interest through 
       September 2011.                                                               $2,748          $2,772

     Obligations under equipment capital leases with interest imputed at rates 
       ranging from 8.4% to 14% per annum. The agreements require aggregate
       monthly payments of approximately $40 including interest through
       March 1997                                                                        80

     Mortgage obligations for thirty-seven store facilities with interest
       ranging from 8.30% to 8.99% per annum.  The agreements require monthly 
       payments of $701 including interest with various dates of maturity from
       November 2007 through November 2009                                            12,937          85,006
                                                                                    -------         -------
     Total debt                                                                      15,765          87,778
       Less current maturities                                                          185           1,008
                                                                                    -------         -------
     Total long-term debt                                                           $15,580         $86,770
                                                                                    =======         =======
</TABLE>
                                      F-10
<PAGE>
         Future minimum payments under the capital lease and mortgage
obligations during the fiscal years subsequent to January 30, 1998 are as
follows:
<TABLE>
<CAPTION>

<S>                 <C>                                                        <C>       
                    1998                                                       $    8,777
                    1999                                                            8,777
                    2000                                                            8,793
                    2001                                                            8,825
                    2002                                                            8,825
                    Thereafter                                                    122,568
                                                                                  -------
                    Total                                                         166,565

                         Less amount  representing interest                        78,787
                                                                                 --------
                         Present value of future minimum lease payments            87,778
                         Less current maturities                                    1,008
                                                                                 --------
                    Total long-term debt                                        $  86,770
                                                                                =========
</TABLE>

NOTE 5 - SUBORDINATED DEBT

         During fiscal 1993, the Company issued $74,750 in convertible
subordinated notes with interest at 4.25%. The notes require semi-annual
interest payments beginning May 1, 1994 through November 1, 2000, the date of
maturity. The notes are convertible into common stock of the Company at any time
on or before November 1, 2000, unless previously redeemed, at a conversion price
of $25.50 per share, subject to adjustment in certain events.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

     TAX RETENTION OPERATING LEASE

         On May 10, 1995, the Company entered into a Tax Retention Operating
Lease Agreement (the "TROL"), whereby an owner trust was formed for the sole
purpose of acquiring and/or constructing properties which will later be leased
to the Company as retail store locations. The TROL had an original aggregate
facility commitment of $70,000. However, effective October 10, 1995, the
aggregate facility commitment under the TROL agreement was increased to $85,000.
Interim rental payments were due under the agreement for the properties opened
within the first two years from the date of the TROL's inception, based upon a
blended interest rate being (i) the greater of the NationsBank prime rate or the
Federal Funds rate, plus 50 basis points, or (ii) the appropriate Eurodollar
Rate plus a variable margin (112.5 to 150 basis points) determined based upon
certain financial ratios of the Company. On June 4, 1996, the TROL was
refinanced and $58,058, the utilized commitment, was incorporated into the
Company's revolving credit facility. Accordingly, this transaction has been
excluded from the accompanying Consolidated Statement of Cash Flows for fiscal
1996.

         In fiscal 1995, the Company utilized the TROL for new store
construction on eight of the 24 stores opened during fiscal 1995. In fiscal
1996, the Company utilized the TROL facility for new store construction on three
of the five stores opened. The total commitment utilized through June 6, 1996
was $58,058. The purpose of the TROL was to provide off-balance sheet financing
of new store site and development costs at attractive rates.

     OTHER OPERATING LEASES

         The Company has leases on 25 store facilities (20 opened stores and
five closing stores), two future store sites, corporate office facilities and
two warehouses with unrelated parties. These leases have terms ranging from five
to 20 years, with options to renew ranging from two to four additional five-year
terms. Additionally, certain store leases provide for contingent rent computed
as a percentage of sales in excess of a specified amount. Contingent rent of
$161, $104 and $81 was incurred for fiscal 1995, fiscal 1996 and fiscal 1997,
respectively.

         In addition to the facility leases, the Company has entered into
various leases for store fixtures, transportation equipment and data processing
equipment under operating lease agreements with terms ranging from three to five
years.
                                      F-11
<PAGE>
         Rent expense under all operating lease agreements including the TROL
for each of the fiscal periods presented is as follows:

                    1995                 12,601
                    1996                 14,136
                    1997                 12,935

         Future minimum lease payments under all non-cancelable operating lease
agreements during the fiscal years subsequent to January 30, 1998 are as
follows:

                    1998                $13,243
                    1999                 11,688
                    2000                  9,269
                    2001                  8,183
                    2002                  7,677
                    Thereafter           57,082
                                       --------
                    Total              $107,142
                                       ========

     NEW STORE CONSTRUCTION

         The Company had previously utilized one construction agent as general
contractor for substantially all of its new store facilities. The agent worked
solely for the Company. Current and future construction is subject to a
competitive bidding process.

NOTE 7 - INCOME TAXES

         Income tax expense (benefit) consists of the following:

                                    FISCAL            FISCAL          FISCAL
                                     1995              1996            1997
                                   -------           -------        ---------
              Current              $ 2,720         $(10,875)         $(1,103)
              Deferred               1,255           (7,000)           1,586
                                   -------           -------         -------
                                   $ 3,975         $(17,875)         $   483
                                   =======         =========         =======


                                      F-12
<PAGE>

         The following is a schedule of the significant net deferred income tax
assets and liabilities as January 31, 1997 and January 30, 1998:
<TABLE>
<CAPTION>
                                                                JANUARY 31,   JANUARY 30,
                                                                   1997          1998
                                                                -----------   -----------
<S>                                                             <C>           <C>
Net Current Deferred Income Tax Asset:
     Non-recurring charges not deductible for
         tax reporting until paid                                $   --        $ 21,525
     Inventory basis difference between tax and
         financial reporting                                       (2,890)         (788)
     Accrued expenses not deductible for tax
         reporting until paid                                       5,912         2,684
     Other                                                             43            74
                                                                 --------      --------
Total current deferred income tax asset, net                        3,065        23,495
                                                                 --------      --------
Net Non-Current Deferred Income Tax Asset (Liability):
     Accelerated tax depreciation                                  (5,188)       (6,304)
     Tax benefit carryovers                                         3,071        24,352
     Accrued expenses not deductible for tax reporting
         until paid                                                   557           715
     Other                                                             81            92
                                                                 --------      --------
Total non-current deferred income tax asset (liability), net       (1,479)       18,855
                                                                 --------      --------
Valuation allowance                                                             (42,350)
                                                                 --------      --------
     Total net deferred tax asset                                $  1,586      $   --
                                                                 ========      ========
</TABLE>
         At January 30, 1998, the Company had tax net operating loss ("NOL")
carryforwards of $59,425 for federal income tax purposes and $85,785 for state
income tax purposes. The federal NOL will expire, if unused, in years 2011 and
2012, and the state NOL's will expire, if unused, in the years 2001 through
2012.

         For the year ending January 30, 1998, the Company recorded a valuation
allowance of $42,350 to offset the deferred tax assets in excess of the deferred
tax liabilities.

         The Company's income tax expense differed from the statutory federal
rate of 34%, as follows:
<TABLE>
<CAPTION>
                                                               FISCAL           FISCAL          FISCAL
                                                                1995             1996            1997
                                                              -------        ---------        ---------
<S>                                                           <C>            <C>              <C>      
Income taxes (benefits) using the federal statutory rate      $ 3,730        $(16,462)        $(37,677)
Increase in taxes resulting from:
     State taxes, net of federal benefit                          162          (1,937)          (4,388)
     Goodwill amortization                                        116             130              130
     Change in valuation allowance                                                              42,350
     Targeted jobs tax credit                                     (33)
     Other differences, net                                                       394               68
                                                              -------        --------         --------  
Total                                                         $ 3,975        $(17,875)        $     483
                                                              =======        ========         =========
</TABLE>

NOTE 8 - EMPLOYEE BENEFIT PLANS

         The Company has a qualified profit sharing and 401(k) savings plan (the
"Plan") covering all employees meeting certain eligibility requirements. The
Plan permits each participant to reduce his or her taxable compensation basis by
up to 15% and have the amount of such reduction contributed to the Plan. The
Company makes a matching contribution of 50% (25% cash and 25% in a company
stock match) of the first 6% of compensation deferred by each participant. In
addition, in any year, the Company may contribute to the Plan additional amounts
determined by the Company's Board of Directors at its sole discretion. Salary
                                      F-13
<PAGE>
reduction contributions are immediately vested in full; matching and
discretionary contributions begin to vest after the participant's first year of
service and become fully vested after the participants fourth year of service.
During fiscal years 1995, 1996 and 1997, expense under the Plan was
approximately $81, $62 and $64, respectively.

         The Company has an Employee Stock Purchase Plan ("ESPP"). The ESPP
allows employees meeting certain eligibility requirements to purchase Company
stock at a 15% discount from the fair market value of the stock price.

         The Company has a key employee non-qualified deferred compensation
plan. The plan allows the employee to defer compensation and earn interest at a
rate of 10% annually. Interest expense for fiscal 1997 was $23.

NOTE 9 - NON-RECURRING, ONE TIME CHARGES AND EFFECT OF MANAGEMENT CHANGE

         In the second quarter of fiscal 1996 the Company recorded one-time
charges of $55.0 million. The components are as follows (in millions):

         Cost of Sales:
             Inventory write-down for shrink
                  and obsolete and slow moving merchandise           $32.4
                                                                     -----
         Non-recurring and other charges:
             Disposition of and impairment of
                 underperforming assets                               11.4
             Charges for certain loss contingencies                    3.0
             Other charges                                             8.2
                                                                   -------
                                                                      22.6
                                                                   -------
                Total                                                $55.0
                                                                   =======

         The inventory write-down for obsolete and slow moving merchandise and
excess shrinkage of $32.4 million was comprised of a $24.3 million charge for
the write-down of inventory below cost and an additional $8.1 million charge for
merchandise inventory shrinkage. The Company recorded the inventory write-down
to correctly state the value of discontinued, obsolete and slow moving inventory
at a net realizable market value. The inventory for which these reserves were
established was sold during fiscal 1996. Throughout the year, the Company
accrued inventory shrinkage at 1.1% of sales based on prior years' experience.
The excess shrinkage recorded at year-end is believed to be attributable to the
inventory clearance sales and the fact that the Company had taken its first SKU
level inventory. The establishment of these reserves did not result in
additional cash payments.

         The $11.4 million charge for impairment of underperforming assets was
attributable to the write-off of undesirable retail sites and impairment of
other sites of $5.2 million and the write-off of assets as the result of
organizational changes of $6.2 million. The write-off of committed retail sites
was for new store projects that were deemed undesirable. The sites were deemed
committed based on proforma operating income projections. The operating income
projections revealed sites which, in the opinion of new management, would not
achieve or maintain the Company's minimum requirements for return on investment.
The charge for impairment of other sites was for nearly-completed retail sites
that were also deemed undesirable based on proforma operating income
projections. The impairment was determined based on the net realizable sale
value of the sites. The establishment of these reserves did not result in
additional cash payments.

         Charges for certain loss contingencies relate to the October 1996
submission of settlement with no admission of liability to the court by the
Company and the plaintiffs in two pending class action suits. The class action
suits asserted claims under the federal securities laws and alleged the Company
artificially inflated the price of its common stock during the class period,
July 14, 1994 through March 13, 1995. By the terms of the settlement, a class
was certified by the court and prorata payments in the total amount of $6.25
                                      F-14
<PAGE>
million were made to the class members submitting claims. Of this amount, $2.875
million was funded by the Company and the remainder funded by the Company's
insurance carrier.

         Other charges were attributable to costs incurred for severance and
related charges of $1.8 million, employee benefit program charges of $4.3
million and other charges of $2.1 million. Cash payments of $0.9 million were
paid in fiscal 1996 and an additional $0.9 million of cash payments will be made
in future periods.

         In the third and fourth quarters of fiscal 1997, the Company recorded
non-recurring charges of $94.3 million related to store closings, excess and
slow moving inventory, severance, outdated technology and the write-off of debt
costs in connection with the Company's revolving line of credit. The components
are as follows (in millions):

       Cost of Sales:
            Mark-down of slow moving and excess inventory              $  17.9
            Additional shrinkage                                           9.5
            Write-down for inventory liquidation of closing stores        17.6
                                                                       -------
                                                                          45.0
       Non-recurring and other charges:
            Charges related to store closings                             40.0
            Other charges                                                  3.0
                                                                       -------
                                                                          43.0
       Depreciation:
       Accelerated depreciation on closing stores                         $1.0

       Interest:
       Write-off of deferred debt costs                                    5.3
                                                                       -------
       Total                                                           $  94.3
                                                                       =======
   
     The markdown of excess  inventory  of $17.9  million was taken to correctly
state the value of merchandise at the lower of cost or market. The primary cause
for this  charge  was due to  problems  experienced  in  athletic  footwear  and
apparel;  both  categories  were  impacted  by  distribution  problems,   overly
aggressive  purchasing and soft sales. The Company took physical  inventories in
each of its stores at year-end.  Throughout  the year,  management had estimated
shrinkage at 2.2% of sales.  This  estimate was based on the prior year's actual
shrinkage  of 2.8% and the  industry  average  of 1.5%.  The  year-end  physical
inventories  resulted in a total shrinkage of 4.0% or  approximately  1.8% above
the accrual. The additional  shrinkage is believed to be primarily  attributable
to implementation  issues in connection with the new  merchandising  systems and
problems encountered with the new distribution  facility.  In February 1997, the
Company changed the inventory  distribution  method and inventory  systems.  The
Company  transitioned  the majority of merchandise  flow from direct delivery to
stores,  to a third party managed cross dock facility.  The initial  start-up of
the cross dock facility  caused  significant  product  delays.  Because of these
delays,  the Company  experienced  lost  inventory,  poor sales and  overstocks,
resulting in higher shrinkage and increased  markdowns to alleviate seasonal and
fashion oriented  inventory levels. In October 1997, the Company  terminated its
relationship  with  the  third-party  distribution  manager  and  returned  to a
merchandise flow direct to the Company's stores.  By fiscal year end,  inventory
levels  returned to normal,  and the Company  expects gross margins to return to
historical  levels in 1998.  The Company  installed  new financial and inventory
systems from JDA Software  Group  (JDA).  The systems were  installed to enhance
inventory  control  information  and support the existing  and future  corporate
infrastructure.  As with any new system, conversion issues arose, but the issues
were timely corrected. The new systems gave the Company real-time information to
manage and control inventory levels. Many of the aforementioned causes have been
addressed and management is focused on reducing and controlling shrinkage during
fiscal  1998.  Additionally,  the Company  will be taking  physical  inventories
throughout the year to better estimate the proper shrinkage accrual. The Company
recorded the inventory  write-down of $17.6 million for store closings inventory
liquidation  based on the net realizable  value of  liquidating  inventory at 26
stores   anticipated   to  close  from  January  1998  through  May  1998.   The
establishment of the  aforementioned  reserves did not result in additional cash
payments in fiscal 1997.
    
                                      F-15
<PAGE>
         The $40.0 million of charges related to store closings represent the
establishment of reserves of $29.1 million for the write-down of closed stores
property and equipment to net realizable value, $6.7 million for expenses
attributable to the closing stores and $4.2 million for lease reserves at
closing locations. The establishment of these reserves did not result in
additional cash payments in fiscal 1997.

         Other charges of $3.0 million are for severance agreements attributable
to the administrative and management workforce reductions in January 1998 and
the establishment of reserves for outdated information communications
technology. Cash payments of $0.5 million were made in fiscal 1997 and $2.5
million of cash payments may be made in future periods.
   
     The  Company  took a  charge  of  $1.0  million  for  the  acceleration  of
depreciation of the closing store  properties.  The Company also accelerated the
write-off of deferred debt costs in  connection  with the  renegotiation  of the
Company's credit facility in the amount of $5.3 million. The deferred debt costs
were loan fees and legal  costs  associated  with the  Company's  former  $185.0
million  revolving  credit  facility  which was revised on January 30, 1998, and
subsequently  refinanced.  The  write-off  of deferred  debt costs were for cash
payments of $3.0 million in fiscal 1997,  $1.0 million in non-cash  payments and
an additional $1.3 million for cash payments to be made in future periods.

     The following  represents  reserve  accounts created for the $55 million in
charges  recorded  in 1996 and the $94  million in charges  recorded in 1997 (in
thousands):

<TABLE>
<CAPTION>
                                                                       1/31/97                                        1/30/98
                               Initial                                 Ending    Reserve                               Ending
Reserve Description           Addition       Reductions    Reclasses   Balance  Addition    Reductions    Reclasses   Balance
-------------------           --------       ----------    ---------   -------  --------    ----------    ---------   --------
<S>                           <C>            <C>           <C>         <C>      <C>         <C>           <C>         <C>
Markdown of slow moving
 and excess inventory                                                           17,928.5      16,100.0                 1,828.5
Write-down for inventory
 liquidation of closing stores                                                  17,538.2       7,348.7                10,189.5
Expenses attributable to
 closing stores                                                                  6,687.7                               6,687.7
Closing store equipment
 reserve                                                                         5,011.5                               5,011.5
Closed store leases                                                              4,221.5        188.9                  4,032.6
Other charges - severance &
 outdated communications
 technology                    1,800.0           841.7                  958.3    3,543.6        720.4                  3,781.5
Disposition and impairment of
 under-performing assets       9,228.7         2,253.7                6,975.0                 5,522.3                  1,452.7
                               -------         -------                -------                 -------                  -------

   Reserve Totals             11,028.7         3,095.4                7,933.3   54,931.0     29,880.3                 32,984.0
                              ========         =======                =======   ========     ========                 =========
</TABLE>
    
         During fiscal 1995, one of the Company's stores was relocated. As a
result, the remaining non-cancelable operating lease commitment attributable to
the original store location was accrued for in full, along with related sales
and property taxes, in the amount of $0.5 million.

         In February 1996, Mr. Bradke, the former CEO and Chairman, resigned. In
conjunction with this departure, as well as the retainage of Mr. Bebis as the
new Chairman, President and CEO, certain charges for severance, bonuses, legal
and other related charges were recognized in fiscal 1995 in the amount of $1.5
million.

NOTE 10 - STOCKHOLDERS' EQUITY

         On July 22, 1992, an increase in the authorized number of shares of
common stock to 20,000,000 and a 3,764-for-1 split of the Company's common stock
was authorized by the Board of Directors.

         On June 23, 1994, the Stockholders of the Company approved an amendment
to the Company's Certificate of Incorporation to increase the authorized number
of shares of common stock to 100,000,000.
                                      F-16
<PAGE>
         On August 24, 1994, the Board of Directors declared a three-for-two
stock split in the form of a 50% stock dividend to shareholders of record as of
September 3, 1994, payable on or about September 26, 1994. All share and per
share data (other than share data in the Balance Sheets and Statements of
Stockholders' Equity) have been restated to give retroactive effect to the
stock-split for all years presented.

         On October 6, 1994, the Company completed a secondary offering of
3,000,000 shares of common stock of which 2,000,000 were sold by the Company and
1,000,000 by certain selling stockholders. Net proceeds to the Company were
$46,825.

         The Company has a Stock Option Plan which was established on September
14, 1989 (the "1989 Plan"). The 1989 Plan provides that options be granted to
certain key employees and directors at exercise prices equal to not less than
50% of fair market value on the date the option is granted. In June 1997, the
stockholders of the Company approved an amendment to the 1989 Plan increasing
the number of shares that may be issued thereunder as 1,000,000 shares. All
options granted to date have been at fair market value on the date of the grant.
Prior to Fiscal 1996, options granted to key employees generally became
exerciseable after one year in 25% increments per year and expire 10 years from
the date of grant. Options granted to key employees in Fiscal 1996 and forward
generally become excerciseable at 40% after two years and 20% per year
thereafter and expire 10 years from the date of grant. Options granted to
directors generally become fully exerciseable after one year and expire 10 years
from the date of grant. The Company has reserved 3,212,212 shares for
distribution under the 1989 Plan. Options to purchase 1,266,103 shares were
granted to key employees and directors thereunder as of January 30, 1998.

         In March of 1996, the Company adopted an additional stock incentive
plan, the 1996 Stock Incentive Plan, for issuance of stock options to Company
employees who are not subject to the reporting requirements of Section 16 under
the Exchange Act (the "1996 Plan"). One million shares are reserved for issuance
under the 1996 Plan, and options to purchase a total of 823,787 shares were
granted to employees thereunder, as of January 30, 1998. Vesting provisions are
similar under both the 1989 Plan and the 1996 Plan. All options granted to date
have been at fair market value on the date of the grant. Options granted to
employees generally become exerciseable after one year in 25% increments per
year and expire 10 years from the date of grant.

         Effective January 30, 1998, the Company adopted SFAS No. 128, "Earnings
Per Share," which established new standards for computing and presenting EPS.
Upon adoption, the Company restated its EPS for fiscal 1995, 1996 and 1997 to
conform with SFAS No. 128. The computations under SFAS No. 128 are summarized
below:
<TABLE>
<CAPTION>
                                                   FISCAL 1995              FISCAL 1996                  FISCAL 1997

                                                               PER                       PER                          PER
                                                      AVERAGE SHARE             AVERAGE SHARE                AVERAGE  SHARE
                                             INCOME   SHARES  AMOUNT   LOSS     SHARES  AMOUNT       LOSS    SHARES   AMOUNT
                                             ------   ------- ------ --------- -------- ------    ---------- -------  ------
<S>                                          <C>      <C>     <C>    <C>       <C>      <C>      <C>        <C>      <C>    
     EPS: BASIC
       Income available to
          common shareholder                  $6,996  19,744  $0.35  $(30,544) 19,985   $(1.53)   $(111,297) 20,363   $(5.47)
                                              ======  ======  =====  ========  ======   ======    ========== ======   =======
     EFFECT OF DILUTIVE SECURITIES
       Options                                $ -        318         $   -        -               $    -       -
       Convertible subordinated notes           -        -               -        -                    -       -
                                              ------  ------  -----  --------- ------   ------    ---------- ------   -------
                                    
     Total Dilution                             -        318             -        -  (1)               -       -   (1)
                                             ------   ------  -----  --------- ------   ------    ---------- ------   -------
     EPS: DILUTED
       Income available to common
          stockholders with assumed
          conversions                        $6,996   20,062  $0.35  $(30,544) 19,985   $(1.53)   $(111,297) 20,363   $(5.47)
                                             ======   ======  =====  ========  ======   ======    =========  ======   =======
<FN>
----------

    (1) Not reported under GAAP as conversion would be anti-dilutive.
</FN>
</TABLE>

                                      F-17
<PAGE>
A summary of stock option activity related to the 1989 and 1996 Plans is as
follows:
<TABLE>
<CAPTION>
                                                                                              WEIGHTED AVG.
                                                                         OPTION PRICE            OPTION
                                                    SHARES                PER SHARE              PRICE
                                                  ----------            -------------         ------------
<S>                                               <C>                   <C>                     <C>     
Outstanding January 29, 1995                      1,532,873             $3.95 - 29.33           $  11.23
     Granted                                        394,150              7.38 - 11.63              11.30
     Exercised                                      (25,592)             3.95 - 15.83               4.28
     Canceled or surrendered                        (55,640)            11.67 - 26.08              19.98
                                                 ----------             -------------           --------
Outstanding January 28, 1996                      1,845,791             $3.95 - 29.33           $  11.08
                                                 ==========             =============           ========
Exercisable at January 28, 1996                   1,194,399             $3.95 - 29.33           $   8.55
                                                 ==========             =============           ========

Outstanding January 29, 1996                      1,845,791             $3.95 - 29.33           $  11.08
     Granted                                      1,317,204               4.38 - 9.75               6.65
     Exercised                                     (376,618)              3.95 - 5.00               4.62
     Canceled or surrendered                       (677,709)             6.75 - 29.33              16.45
                                                 ----------            --------------           --------
Outstanding January 31, 1997                      2,108,668             $3.95 - 29.33           $   7.74
                                                 ==========             =============           ========
Exercisable at January 31, 1997                     701,323             $3.95 - 29.33           $   9.15
                                                 ==========             =============           ========

Outstanding February 1, 1997                      2,108,668             $3.95 - 29.33           $   7.74
     Granted                                      1,145,700               1.00 - 6.75               3.20
     Exercised                                      (19,085)                  3.95                  3.95
     Canceled or surrendered                     (1,145,393)             3.44 - 26.08               6.64
                                                 -----------            -------------           --------
Outstanding January 30, 1998                      2,089,890             $1.00 - 29.33           $   5.89
                                                 ==========             =============           ========
</TABLE>

The following table further summarizes information about the 1989 and 1996
Plans:
<TABLE>
<CAPTION>
                                                       WEIGHTED           WEIGHTED                        WEIGHTED
                                   NUMBER               AVERAGE            AVERAGE          NUMBER         AVERAGE
         RANGE OF                OUTSTANDING           REMAINING          EXERCISE        EXERCISABLE     EXERCISE
      EXERCISE PRICES            AT 1/30/98         LIFE (IN YEARS)        PRICE          AT 1/30/98        PRICE
      ---------------            ----------         ---------------       --------        -----------     --------
<S>  <C>                         <C>                <C>                   <C>             <C>              <C>    
     $ 1.00 to $3.95             1,081,469               8.2              $  2.68           496,669       $  2.84
     $ 4.13 to 9.50                672,237               8.6                 7.06            70,256          8.51
      11.50 TO 29.33               336,184               5.2                13.87           312,327         13.98
     ----------------            ---------               ---              -------           -------       -------
     $ 1.00 to $29.33            2,089,890               7.8              $  5.89           879,252       $  7.25
     ================            =========               ===              =======           =======       =======
</TABLE>

         In October 1995, the Financial Accounting Standards Board issued
Financial Accounts Standard No.123, "Accounting for Stock Based Compensation"
("SFAS 123") which is effective for fiscal years beginning after December 15,
1995. As permitted by SFAS 123, the Company has elected to continue to account
for its stock based plans under APB No. 25, "Accounting for Stock Issued to
Employees".

         If the Company had elected to recognize compensation expense for stock
options based on the fair value at grant date, consistent with the method
prescribed by SFAS 123, net income and earnings per share would have been
reduced to the proforma amounts shown below:

                                                     FISCAL           FISCAL
                                                      1996             1997
                                                    --------        ----------
                Net income (loss)
                    As reported                     $(30,544)       $(111,297)
                    Proforma                        $(33,437)       $(112,193)

                Earnings per share
                    As reported                       $(1.53)          $(5.47)
                    Proforma                          $(1.67)          $(5.51)

                                      F-18
<PAGE>


     The proforma  amounts were  determined  using the  Black-Scholes  Valuation
Model with the following key  assumptions:  (i) a discount rate of 7.0% and 5.6%
for 1996 and 1997, respectively; (ii) a volatility factor initially based on the
average trading price for the prior 18 months; (iii) no dividend yield; and (iv)
an average expected option life of four years.
   
     In 1997,  680,000  options were canceled for executive  officers (Mr. Bebis
and Mr. Wittman) who terminated their  employment with the Company.  The balance
of the options canceled in 1997 were for other employees who terminated  service
with the company. The grants in fiscal 1997, were primarily to Mr. Bush, 200,000
options,  and Mr. Floum,  200,000 options.  The balance of option grants were to
incoming management personnel.
    
     In  conjunction  with the  change in  management  as  described  in Note 9,
236,500  outstanding  options with exercise prices ranging from $11.67 to $29.33
were  canceled  and  reissued to Mr.  Bradke at the then market  value of $5 per
share.  The options vest  immediately and expire 5 years from the date of grant.
Additionally,  300,000  options  were  issued to the Mr.  Bebis with an exercise
price of $4.38,  the market value on the date of grant.  The options vest 40% on
the second anniversary of the date of the grant and 20% each year thereafter and
expire 10 years  after  the date of  grant.  In  addition  to the  above  option
activity  and as result of the February  1996  management  change,  options were
canceled and reissued to new management.

NOTE 11 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

         Summarized quarterly financial data for fiscal 1997 and fiscal 1996 is
as follows:
   
<TABLE>
<CAPTION>
                                             FIRST         SECOND        THIRD        FOURTH
                                            --------      --------      --------     --------
<S>                                         <C>           <C>           <C>          <C>
1997
Net Sales                                   $130,134      $136,225      $129,945     $132,330
Gross profit                                  30,654        33,605         9,302        1,564
Non-recurring & other charges                                             18,472       24,583
Net loss                                      (1,505)       (1,879)      (45,763)     (62,150)
Primary and fully diluted earnings
     per common share:

Net loss                                    $  (0.07)     $  (0.09)     $  (2.26)    $  (3.05)
                                            ========      ========      ========     ========
1996
Net sales                                   $143,658      $169,014      $136,798     $174,549
Gross profit                                  32,823         8,535        35,934       41,665
Non-recurring & other charges                               22,568
Net income (loss)                               (345)      (33,233)          898        2,136
Primary and fully diluted earnings
     per common share:

Net income (loss)                           $  (0.02)     $  (1.67)     $   0.04     $   0.12
                                            ========      ========      ========     ========
</TABLE>
    

                                      F-19

<PAGE>

                                  EXHIBIT INDEX

EXHIBIT
NUMBER        DESCRIPTION
------        -----------

   
3.1           Articles of Incorporation of JumboSports Inc.
    
4.1           Specimen Common Stock Certificate.
4.2           Specimen of Debt Security.
10.4          Employment Agreement, dated April 15, 1996, between JumboSports
              Inc. and Raymond P. Springer.
10.5          Consulting Agreement, dated January 16, 1998, between JumboSports
              Inc. and Jack E. Bush.
10.7          Amended and Restated Credit Agreement, dated as of May 28, 1997,
              among JumboSports, each of the subsidiaries of JumboSports,
              Barnett Bank, N.A., NationsBank, N.A., and each of the Lenders (as
              defined in the Amended and Restated Credit Agreement).
10.8          Form of Stock Option Agreement pursuant to the 1989 Stock
              Incentive Plan for options granted to employees.
10.9          Form of Stock Option Agreement pursuant to the 1996 Stock
              Incentive Plan for options granted to Directors.
12            Computation of Ratio of Earnings to Fixed Charges.
23.1          Consent of Coopers & Lybrand L.L.P.
23.2          Consent of Deloitte & Touche LLP.
27            Financial Data Schedule (Edgar filing-only)
99            Schedule II - Valuation and Qualifying Accounts.