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

                                   FORM 10-K/A

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934.  (NO FEE REQUIRED EFFECTIVE OCTOBER 7, 1996)

                  For the fiscal year ended January 31, 1997

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

          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. [X] Yes [ ] 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 7, 1997, was $119.5 million.  The number of shares of
the registrant's common stock outstanding as of March 7, 1997, was 20,339,409.

<TABLE>
                     Documents Incorporated by Reference
                     -----------------------------------
   <S>                                                                                               <C>
   Proxy Statement for Annual Meeting of Stockholders to be held June 4, 1997........................Part III
</TABLE>
================================================================================
<PAGE>


     As used in this Annual Report on Form 10-K/A,  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

     JumboSports  is  a  specialty  retailer  of  quality  name  brand  sporting
equipment,  athletic  footwear and apparel,  operating 85 big-box sporting goods
superstores in 65 markets and 29 states.  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 31, 1997, the Company  employed  approximately  5,000 people.
None  of  the  Company's   associates  are  covered  by  collective   bargaining
agreements.  The Company believes that its relationships with its associates are
good.  Over the past 5 years,  the Company has experienced  significant  growth,
almost  quadrupling  its store base from 24 to 85 and gross square  footage from
997,000 to 4,257,000.  During Fiscal 1996, new management halted store expansion
activity in order to concentrate on developing the  infrastructure  necessary to
better manage its business.

     The infrastructure  improvements  include: a single name for all its stores
in order to create brand identity and achieve certain advertising  efficiencies;
a comprehensive information management system which integrates store operations,
merchandising,    distribution   and   financial   management;   a   centralized
cross-docking  facility to reduce costs and enhance inventory management;  and a
focused strategy of operating stores in markets in which the Company can achieve
desired market share along with advertising and operating efficiencies.

     No new stores are currently  planned to open in fiscal 1997;  however,  the
Company has re-instituted activities to insure new stores begin opening again in
fiscal 1998. The Company is currently  developing a new prototype  which will be
incorporated  into an existing  store this fall. The prototype will then be used
for all future new stores as well as store remodels. The Company believes it has
established a reputation  with the consumer as a premier  retailer of hard-lines
(equipment  required to  participate in sports and  recreational  activities ie:
baseball bats,  footballs,  etc.) sporting goods. While an emphasis on improving
soft-lines  (athletic,  team logo and casual  apparel  and  athletic  and casual
footwear)  presentations will be inherent in the prototype,  the new design will
not abandon a hard-lines 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



                                                                               2
<PAGE>

customer through  selection,  service and price. There are over 180 metropolitan
markets across the country that fit the Company's target criteria.

     The Company purchases  merchandise from over 1,000 vendors. In fiscal 1996,
the fifty highest volume  vendors  represented  almost 60% of total  merchandise
purchased.  Nike, Inc. being the Company's largest vendor accounted for 13.5% 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.,  Gart Brothers,  Oshman's),  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.  Sports  Authority,  SportMart)  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 sku's.  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 85 stores,  approximately  28 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.


ITEM 2. PROPERTIES.

     As of January 31, 1997, the Company  operated 85 retail stores in 29 states
(9 in Florida, 2 in Alabama, 1 in Arkansas, 3 in Arizona, 1 in California,  3 in
Colorado, 1 in Delaware, 3 in Georgia, 2 in Illinois, 2 in Iowa, 2 in Indiana, 2
in Kansas, 3 in Kentucky, 5 in Louisiana, 4 in Michigan, 1 in Mississippi,  1 in
Missouri,  4 in North Carolina,  2 in Nebraska, 1 in Nevada, 3 in New York, 5 in
Ohio, 3 in Oklahoma, 1 in Pennsylvania,  3 in South Carolina, 5 in Tennessee,  8
in Texas,  4 in Virginia and 1 in Wisconsin) and its Corporate  Headquarters  in
Tampa,  Florida.  The  Company  owns 60 stores and leases the other 25 of its 85
retail stores.  Two of the 25 leases are capital leases. The primary lease terms
are  for 10 to 20  years,  with  options  to  renew  ranging  from  two to  four
additional five-year terms.



                                                                               3
<PAGE>


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 March 1995,  two identical  actions were filed against the Company,  its
executive  officers and certain of its  directors.  During fiscal 1995,  the two
actions  were merged  into one class  action  suit.  The  complaint  purportedly
brought on behalf of purchasers of the Company's common stock from July 14, 1994
through March 13, 1995 ("the class  period"),  asserted claims under the federal
securities laws, and alleged that the Company artificially inflated the price of
its common  stock  during the class  period.  On October 21,  1996,  the parties
submitted a  stipulation  of  settlement  without  admission of liability to the
court.  By the terms of the  settlement,  a class will be certified by the court
and pro rata  payments  in the total  amount of  $6,250,000  will be made to the
class members  submitting  claims. Of this amount,  $3,375,000 will be funded by
the Company's  insurance  carrier and the balance  funded by the Company.  These
payments  have already  been  deposited  in an escrow  account  subject to final
approval of the settlement by the court. On February 28, 1997, the United States
District  Court,  Middle  District  of Florida,  entered an order  preliminarily
approving the  settlement and scheduling a hearing for final approval on June 5,
1997.  As of the  date of this  report,  no  objections  have  been  made to the
settlement.

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

     None.

                                   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.

<TABLE>
<CAPTION>
                          Fiscal 1995     High    Low
                         --------------  ------  ------
                         <S>             <C>     <C>
                         First Quarter   24.000  11.125
                         Second Quarter  15.000  10.250
                         Third Quarter   13.875   7.000
                         Fourth Quarter   8.875   5.000

                         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
</TABLE>


     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 31, 1997 was 335, and as of that date, the Company  estimates that there
were approximately 6,300 beneficial owners holding stock in nominee or "street"
name.

     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),


                                                                               4
<PAGE>

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;  31,000
shares at $7.375 per share on January 10,  1996,  and 6,600 shares at $6.875 per
share on August 21, 1996. 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>


ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>


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

                                                     January 31,     January 30,      January 29,    January 28,    January 31,
                                                       1993             1994            1995            1996           1997
                                                     ----------      ----------       ----------     ----------     ----------
"Fiscal Year"                                         "1992"           "1993"           "1994"         "1995"         "1996"
STATEMENT OF OPERATIONS DATA:
<S>                                                <C>              <C>              <C>            <C>            <C>
    Sales                                          $   167,355      $   239,301      $   383,600    $   525,762    $   624,019
    Cost of sales including buying
        and occupancy costs                            125,486          177,242          283,908        395,208        505,062
                                                   -----------      -----------      -----------    -----------    -----------
    Gross profit                                        41,869           62,059           99,692        130,554        118,957
    Selling, general and administrative expenses        29,022           42,779           69,207        106,233        124,918
    Vesting of performance shares                          908(1)
    Non-recurring and other charges                                                                       2,096         22,568
                                                   -----------      -----------      -----------    -----------    -----------
    Income (loss) from operations                       11,939           19,280           30,485         22,225        (28,529)
    Interest expense, net                                3,263              863            4,815         11,254         19,890
                                                   -----------      -----------      -----------    -----------    -----------
    Income (loss) before provision (benefit)
        for income taxes and extraordinary item          8,676           18,417           25,670         10,971        (48,419)
    Provision (benefit) for income taxes                 3,206            7,101            9,775          3,975        (17,875)
                                                   -----------      -----------      -----------    -----------    -----------
    Income (loss) before extraordinary item              5,470           11,316           15,895          6,996        (30,544)
    Extraordinary item (less applicable
        income tax benefit)                               (417)(2)                          (181)(2)
                                                   -----------      -----------      -----------    -----------    -----------
    Net income (loss)                              $     5,053      $    11,316      $    15,714    $     6,996    $   (30,544)
                                                   ===========      ===========      ===========    ===========    ===========
    Net income (loss) per share
        before extraordinary item                  $      0.39(3)   $      0.62(4)         $0.84(4) $      0.35(4)       (1.53)(4)
    Net income (loss) per share                    $     $0.36(3)   $      0.62(4)         $0.83(4) $      0.35(4)       (1.53)(4)
    Average number of shares outstanding            13,987,924       18,120,103       18,844,412     20,062,155     19,984,993
    Ratio of earnings to fixed charges                    2.88             5.96             3.61           1.61            N/M


SELECTED OPERATING DATA:
    Stores open at end of period                            24               39               56             80             85
    Total gross square feet of store space             977,000        1,699,450        2,626,600      3,996,920      4,257,000
    Average gross square feet per store (5)             40,708           43,576           46,904         49,962         50,082
    Comparable store sales increase (6)                   11.6%             8.0%             9.6%           1.7%           0.1%
    Capital expenditures                           $     5,003      $    55,331      $    89,610    $    60,738    $    15,236


BALANCE SHEET DATA:
    Working Capital                                $    70,464      $   101,046      $   167,498    $   190,974    $   158,678
    Total assets                                       133,858          233,220          389,852        484,843        525,586
    Long-term debt, less current maturities              4,070           78,457          167,703        234,557        294,325
    Total stockholders' equity                         105,462          117,379          180,122        187,530        159,624
</TABLE>

(1)  A  non-recurring  non-cash  expense  ($567 net of tax or $0.04 per  share),
     representing the unamortized  balance of performance  shares.  These shares
     vested upon the Company's  initial public offering  ("IPO") of Common Stock
     in September 1992.
(2)  The  extraordinary  item for the fiscal  years  ended  January 31, 1993 and
     January 29, 1995 relate to early redemption premiums incurred in connection
     with the prepayment of certain liabilities.
(3)  The Company had a material change in its capital structure as a result of
     its IPO on September 16, 1992.  See Note 10 of Notes to Consolidated
     Financial Statements.
(4)  The November 1993  issuance of 4 1/4%  Convertible  Subordinated  Notes Due
     2000 did not have a dilutive  effect in Fiscal 1993,  Fiscal  1994,  Fiscal
     1995  or  Fiscal  1996.  See  Note 5 of  Notes  to  Consolidated  Financial
     Statements.
(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.

                                                                               6
<PAGE>


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

     This  Management's   Discussion  and  Analysis   contains   forward-looking
statements.  These  forward-looking  statements  are  subject  to  the  inherent
uncertainties in predicting future results and conditions. Certain factors could
cause  actual  results  to  differ  materially  from  those  projected  in these
forward-looking statements.

   GENERAL

   RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                Fiscal Year Ended
                                     ----------------------------------------------------
                                     January 29, 1995  January 28, 1996   January 31,1997
                                     ----------------------------------------------------

    "Fiscal Year"                           "1994"         "1995"             "1996"
    <S>                                      <C>           <C>                <C>
    Sales                                    100.0%        100.0%             100.0%
    Cost of sales
     including buying
     and occupancy costs                      74.0          75.2               80.9
                                             -----         -----              -----
    Gross profit                              26.0          24.8               19.1
    Selling, general and
      administrative expenses                 18.0          20.2               20.0
    Non-recurring and other charges                           .4                3.7
                                             -----         -----              -----
    Income (loss) from operations              8.0           4.2               (4.6)
    Interest expense, net                      1.3           2.1                3.2
                                             -----         -----              -----
    Income (loss) before provision (benefit)
      for income taxes and
      extraordinary item                       6.7           2.1               (7.8)
    Provision (benefit) for income taxes       2.5           0.8               (2.9)
                                             -----         -----              -----
    Income (loss) before extraordinary
      item                                     4.2           1.3               (4.9)
    Extraordinary item (less applicable tax
      benefit)                                (0.1)
                                              ----         -----              -----
    Net income (loss)                          4.1%          1.3%              (4.9)%
                                              ====         =====              =====
</TABLE>

     In the second quarter of Fiscal 1996 the Company recorded  one-time charges
of $55 million. The components are as follows:

<TABLE>
              <S>                                            <C>
              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
                                                             =====
</TABLE>
                                                                               7
<PAGE>

     The  inventory   write-down   for  shrink  and  obsolete  and  slow  moving
merchandise  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. 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 establishment of these reserves did
not result in additional cash payments.

     The write-off of  undesirable  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,
July 14, 1994 through  March 13, 1995. By the terms of the  settlement,  a class
will be  certified  by the court and  prorata  payments  in the total  amount of
$6,250 will be made to the class  members  submitting  claims.  Of this  amount,
$2,875 will be funded by the Company and the  remainder  funded by the Company's
insurance carrier.

     Other  charges  were   attributable  to  costs  incurred  in  the  February
management change for severance and related charges $1,800, for employee benefit
program changes $4,300 and for other charges $2,100.  Cash payments of $900 were
paid in fiscal 1996 and an additional  $900 of cash payments will be realized in
future periods.


                     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 inventory  clearance sale was to
sell-through  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:

                                                                               8
<PAGE>

<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.

     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 million in charges
discussed above.

     The Company's interest expense,  net increased to $19.9 million, or 3.2% of
sales,  in  fiscal  1996,  from  $11.3,  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  $100,000 of interest  rate Collars  which  impacted  Interest
Expense in fiscal 1996 by $15.

     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  million of
charges  as  discussed  above,  resulting  in a net  charge  after-tax  of $34.6
million.

     The Company consistently reviews its merchandising  strategy and promotions
to maximize store sales and productivity. The development of formalized training
programs and  concentration on customer  services are areas the Company believes
will enhance sales and operating  performance.  Management believes that through
the  implementation of a "labor scheduling" model and periodic operating expense
and merchandising  statistics review meetings, the Company has begun a change in
the organizational culture to continue to focus on improving operating results


                     FISCAL 1995 COMPARED WITH FISCAL 1994

     During  fiscal 1995,  the Company  opened 24 new stores  compared to 17 new
store openings in fiscal 1994. At the end of fiscal 1995,  the Company  operated
80 stores in 27 states.  Sales increased to $525.8 million,  a 37% increase over
the $383.6  million in the prior year. Of this  increase,  1.7% was derived from
comparable stores sales growth,  while 35.3% was derived from the 41 stores with
no sales in the corresponding months of the prior year.

                                                                               9
<PAGE>

     Gross  profit for fiscal  1995 was $130.6  million,  or 24.8% of sales,  as
compared to $99.7  million,  or 26.0% of sales in fiscal  1994.  The decrease in
gross margin percentage is primarily  attributable to lower merchandise  margins
in the first fiscal quarter,  and an increase in buying and occupancy costs as a
percentage of sales throughout the year.

     Selling,  general  and  administrative  expenses in fiscal 1995 were $108.3
million,  or 20.6% of sales as compared to $69.2 million,  or 18.0% of sales, in
fiscal 1994.  This increase as a percentage of sales was primarily  attributable
to higher  store  labor  costs and media  spending,  as well as certain one time
charges  related  to  management  changes  occurring  in  February  1996 and the
relocation of one store in fiscal 1995.

     Income from  operations was $22.2 million,  or 4.2% of sales, a decrease of
27.2% from the $30.5 million, or 8.0% of sales, in fiscal 1994. The lower income
from  operations  was a result of both lower  merchandise  margins and increased
operating expenses.

     The Company's  interest  expense,  net increased to $11.3 million in fiscal
1995 from $4.8 million in fiscal 1994. This increase was the result of increased
borrowings on the Company's  $200 million  unsecured  line of credit in order to
fund  working  capital  and  capital  expenditure  requirements  for  new  store
construction,  along with interest  expense on the Company's  $74.8 million of 4
1/4% Convertible  Subordinated  Notes Due in 2000, which were issued in November
1993.

     The Company's  income tax expense  decreased in fiscal 1995 to $4.0 million
from $9.8 million in fiscal 1994. The Company's  effective tax rate was 36.2% in
fiscal 1995 compared to 38.1% in fiscal 1994.  The primary  reasons for the rate
decrease  were a lower  blended  federal  income  tax  rate,  as well as a lower
blended state income tax rate due to state tax planning initiatives.

     The Company's income in fiscal 1995,  before  extraordinary  item, was $7.0
million. This is a decrease from fiscal 1994 income before extraordinary item of
$15.9 million. This decrease was a result of factors previously discussed.

     In fiscal 1994, the Company incurred a $0.2 million extraordinary item (net
of tax) related to the early  extinguishment  of debt. As a result,  the Company
had net  income of $7.0  million in fiscal  1995  compared  to $15.7  million in
fiscal 1994.

     ACCOUNTING STANDARDS

     In  1995  the  Financial   Accounting   Standards  Board  issued  FAS  123,
"Accounting for Stock Based Compensation",  effective for fiscal years beginning
after December 15, 1995. FAS 123 encourages,  but does not require, companies to
recognize  compensation  expense  based on fair  value  grants of  stock,  stock
options and other equity instruments to employees.  Although expense recognition
for  employee  stock-based  compensation  is not  mandatory,  FAS  123  requires
non-adopting  companies to disclose  proforma net income and earnings per share.
The  Company  has elected to continue to account for its stock based plans under
APB No. 25, "Accounting for Stock Issued to Employees."  Proforma adjustments to
net  income  and  earnings  per share  are shown in Note 10 to the  Consolidated
Financial Statements.

     In  1995  the  Financial   Accounting   Standards  Board  issued  FAS  121,
"Accounting  for  Impairment of Long-Lived  Assets to be Disposed of." Effective
for years  beginning  after December 15, 1995, FAS 121 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 $5.2 million pre-tax charge as part
of the $22.6 million charge it took in the second quarter of fiscal 1996.

                                                                              10
<PAGE>

     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,  and proceeds  from a two million  share  common stock  offering in 1994),
internally  generated  funds and credit terms from  vendors.  Historically,  the
Company's working capital needs peak in the fourth fiscal quarter.

     Operating activities in fiscal 1996 provided cash of $13.2 million compared
to cash usage of $8.8 million in fiscal 1995. The  improvement was primarily due
to decreased inventories associated with the inventory clearance sale during the
second and third quarters of the current fiscal year.

     Net cash of $11.8  million was used in investing  activities  during fiscal
1996 compared to $59.8  million net cash used in investing  activities in fiscal
1995. The decrease was primarily related to a reduction in new construction.  In
the current year, the Company completed  construction on five new stores. In the
prior  year,  the  Company had  completed  24 stores and had five  others  under
construction  at year end. In fiscal 1995, the Company  utilized a Tax Retention
Operating Lease "TROL" financing facility 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  $58.1  million.  The
purpose of the TROL was to provide off-balance sheet financing of new store site
and development costs at attractive rates.

     Cash flows used in financing activities were $25 in fiscal 1996 as compared
to $67.3  million  provided in fiscal  1995.  The  decrease in cash  provided by
financing activities in fiscal 1996 was primarily due to less borrowing activity
on the  Company's  revolving  line of credit from the prior year,  the result of
lower  investing  activities  for new stores and increased  cash from the second
quarter inventory  clearance.  The TROL commitment utilized through June 6, 1996
was refinanced as part of the Company's $271 million revolving line of credit on
June 6, 1996. Participants in the TROL facility and the revolving line of credit
were  virtually  identical.  The  refinancing  of the  revolving  line of credit
involved  securing  the  facility  with the  assets of the  Company.  The amount
outstanding  under the TROL was included in the new revolving line of credit and
the TROL assets were used as additional collateral under the amended agreement.

     As of January 31, 1997,  the Company had $2.8 million of long-term  capital
lease  obligations,  $12.9  million of  long-term  mortgage  obligations,  $74.8
million  of 4  1/4%  Convertible  Subordinated  Notes,  and  $204.0  million  in
borrowings under its $271 million  revolving  credit facility.  The $271 million
revolver matures June 1998 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  maintenance of
certain  financial  ratios. As of January 31, 1997 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 1%, or LIBOR plus 2%,
subject to a maximum 50 basis point  increase or a 75 basis point decrease based
on certain predetermined criteria.

     The Company's total  anticipated  capital  expenditures  are expected to be
less  than  $22  million  for  fiscal  1997  (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 $271 million revolving credit facility and net cash provided
by  operating   activities  will  be  sufficient  to  fund  anticipated  capital
expenditures and working capital requirements for the upcoming year.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The  information  called for by this item is contained in the  Consolidated
Financial Statements and Supplementary Data are set forth in Item 14A.


                                                                              11
<PAGE>


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 31,  1997,  and the Board of  Directors  has
reappointed  them to act as the public  accountants  for the fiscal  year ending
January 30,  1998.  Previously,  the firm of Deloitte & Touche LLP  ("Deloitte &
Touche") served as the Company's accountants.  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,  qualifications  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, as part of the overall  management  restructuring that
occurred in February and March, 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 5 and 6 of the Company's 1997
           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 9 of the  Company's
           1997 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 26 of the Company's 1997 Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION.

     The information  required by this Item is incorporated  herein by reference
to "Additional Information Concerning  Directors-Directors' Fees" on page 7, and
"Executive  Compensation"  on pages 10 through 11, of the  Company's  1997 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 1997 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 25 of the Company's
1997 Proxy Statement.

                                                                              12
<PAGE>



                                   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


<TABLE>
<CAPTION>
                                                                    PAGE
       <S>                                              <C>
       Reports of Independent Accountants.......................F-1, F-2
       Consolidated Balance Sheets...................................F-3
       Consolidated Statements of Operations.........................F-4
       Consolidated Statements of Stockholders' Equity...............F-5
       Consolidated Statements of Cash Flows.........................F-6
       Notes to the Consolidated Financial Statements................F-7
</TABLE>


  (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 13


(B)  REPORTS ON FORM 8-K:

     No  reports  on Form 8-K were filed by the  Registrant  during the  quarter
ended January 31, 1997.




                                                                              13
<PAGE>


                                EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit                                                                               Sequential
Number       Description                                                                Page No
<S>   <C>    <C>
             Financial Statements - see index on page 10.

             Financial Statement Schedules - see index on page 10.

      2.1    Plan and Agreement of Merger

      2.2    Amendment to the Plan and Agreement of Merger

      3.1    Certificate of Incorporation of JumboSports Inc.

      3.2    Bylaws of JumboSports Inc.

#     4.1    Specimen Common Stock Certificate

      4.4    Supplemental Indenture Agreement

[ ]   4.2    Specimen of Debt Security

[ ]   4.3    Indenture between JumboSports Inc. and Barnett Banks
             Trust Company, National Association, as Trustee

*     10.1   Employment Agreement dated September 14, 1989, by and
             between the Company's predecessor and Jim W. Bradke, as
             amended on July 22, 1992

*     10.2   Form of Indemnification Agreement by and between the Company
             and each Director

#     10.3   1989 Stock Incentive Plan, as amended through June 23, 1994

*     10.4   Registration Rights Agreement

[ ]   10.5   Waiver and Clarification Agreement

*            10.6 Form of Stock  Option  Agreement  pursuant  to the 1989  Stock
             Incentive  Plan  for  options  granted  to  Officers  prior  to the
             Company's Initial Public Offering

*     10.7   Form of Key Man Insurance Policy on each Officer's life in favor
             of beneficiaries designated by the respective Officer

*     10.8   Officers' Medical Reimbursement Plan

*     10.9   Management Cash Bonus Plan

+            10.10  $285  Million  Credit  Agreement  dated as of June 4,  1996,
             between JumboSports Inc., as Borrower, the Lenders Named Therein as
             Lenders,  Barnett Bank of Tampa,  as  Administrative  Agent and L/C
             Issuer  and  NationsBank  of  Florida,   National   Association  as
             Documentation  Agent,  as  amended by the First  Amendment  thereto
             dated November 6, 1996

</TABLE>


                                                                              14
<PAGE>


<TABLE>
<S>   <C>    <C>

*            10.11 Form of Stock  Option  Agreement  pursuant  to the 1989 Stock
             Incentive  Plan for options  granted to  employees on and after the
             Company's Initial Public Offering

[            ] 10.12 Form of Stock Option  Agreement  pursuant to the 1989 Stock
             Incentive Plan for options granted to Directors

#     10.13  Employee Stock Purchase Plan, as amended through November 14,
             1994

#     10.14  Executive Retirement Savings Plan

+     10.15  Participation Agreement dated as of May 10, 1995, among
             Sports & Recreation, Inc., as Construction Agent and Lessee, First
             Security Bank of Utah, N.A., not individually, except as
             expressly stated therein, but solely as Owner Trustee under the
             S&R Trust 1995-1, and NationsBank of Florida, N.A., as Holder
             and as Administrative Agent for the Lenders, and the First
             Amendment thereto dated July 28, 1995

=     10.16  Employment Agreement dated February 6, 1996, by and between
             JumboSports Inc. and Stephen Bebis

=     10.17  Letter Agreement dated March 1, 1996, by and between
             JumboSports Inc. and Robert J. Wittman

=     10.18  Letter Agreement dated April 5, 1996, by and between
             JumboSports Inc. and Raymond P. Springer

      11     Weighted Average Shares Outstanding Calculation

      12     Computation of Ratio of Earnings to Fixed Charges

      13     1996 Annual  Report to  Stockholders  - except for the  portions of
             that report  expressly  incorporated  by reference into this Annual
             Report  on  Form  10-K,   the  Company's   1996  Annual  Report  to
             stockholders is not deemed filed as part of this filing

=     21     List of Subsidiaries

o     23.1   Consent of Coopers & Lybrand L.L.P.

=     23.2   Consent of Deloitte & Touche LLP

      27     Financial Data Schedule (Edgar filing-only)

      99.1   Report of Coopers and Lybrand L.L.P.

      99.2   Schedule II - Valuation and Qualifying Accounts

      99.3   Articles of Merger of JumboSports Inc. and Sports & Recreation Reincorporation, Inc.

      99.4   Certificate of Ownership and Merger of JumboSports Inc. and Sports &
             Recreation Reincorporation, Inc.

      99.5   Certificate of Ownership and Merger of Sports & Recreation Macro
             Sports, Inc.


</TABLE>

                                                                              15
<PAGE>

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

<TABLE>
<S>  <C>
#    Incorporated  by reference  to exhibits  included in the  Company's  Annual
     Report on Form 10-K for the fiscal year ended January 29, 1995.

*    Incorporated by reference to exhibits included in the Company's
     Registration Statement of Form S-1 (Registration Statement No. 33-50098).

[    ] 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

+    Incorporated by reference to exhibits  included in the Company's  Quarterly
     Report on Form 10-Q for the quarter ended October 27, 1996.

o    Incorporated by reference to page F-1 of this Annual Report on Form 10-K.

=    Incorporated  by reference  to exhibits  included in the  Company's  Annual
     Report on Form 10-K for the fiscal year ended January 28, 1996.
</TABLE>



                                                                              16
<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, 1997.

                                                 JumboSports Inc.
                                                   (Registrant)



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


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

                                          By: /s/    JACK E. BUSH
                                              ----------------------------------
                                              Jack E. Bush, Director

                                          By: /s/    HAL COMPTON
                                              ----------------------------------
                                              Hal Compton, Director

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

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

                                          By: /s/    CHRIS T. SULLIVAN
                                              ----------------------------------
                                              Chris T. Sullivan, Director

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









                                                                              17

<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors and Stockholders of JumboSports Inc.

We have audited the accompanying  consolidated balance sheet of JumboSports Inc.
and  subsidiaries  (the  "Company")  as of  January  31,  1997  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the  year  ended  January  31,  1997.   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, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of the Company as of
January 31, 1997 and the  results of its  operations  and its cash flows for the
year ended January 31, 1997, in conformity  with generally  accepted  accounting
principles.

                                             COOPERS & LYBRAND L.L.P.



Tampa, Florida
March 21, 1997


                                                                             F-1


<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors and Stockholders of JumboSports Inc.

We have audited the accompanying  consolidated balance sheet of JumboSports Inc.
(formerly known as Sports & Recreation,  Inc.) and subsidiaries  (the "Company")
as of  January  28,  1996 and the  related  consolidated  statements  of income,
stockholders'  equity  and cash  flows for each of the two  fiscal  years in the
period 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 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,  such consolidated  financial  statements present fairly, in all
material respects,  the financial position of the Company as of January 28, 1996
and the results of its  operations  and its cash flows for each of the two years
in the period ended  January 28, 1996,  in conformity  with  generally  accepted
accounting principles.

                              DELOITTE & TOUCHE LLP



Tampa, Florida
March 22, 1996



                                                                             F-2


<PAGE>


                               JUMBOSPORTS INC.
                         CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

(IN THOUSANDS EXCEPT FOR SHARE DATA)
                                                                   January 28,   January 31,
ASSETS                                                                 1996         1997
                                                                   -----------  -----------
<S>                                                                   <C>          <C>
  Current assets:
     Cash and cash equivalents                                        $  3,590     $  4,944
     Accounts receivable, net                                            7,184        2,338
     Inventories                                                       236,234      201,090
     Prepaid expenses and other assets                                   2,039        4,495
     Income tax receivable                                                          11,386
     Deferred tax asset                                                               1,586
                                                                      --------     --------
            Total current assets                                       249,047      225,839
                                                                      --------     --------

  Property and equipment, net                                          218,269      282,651
  Other assets:
     Cost in excess of fair value of net assets acquired, net           11,487       11,145
     Other                                                               6,040        5,951
                                                                      --------     --------
            Total other assets                                          17,527       17,096
                                                                      --------     --------
  Total assets                                                        $484,843     $525,586
                                                                      ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
     Current portion of long-term debt                                $    497     $    185
     Accounts payable                                                   44,328       37,050
     Accrued expenses                                                    6,910       16,462
     Other                                                               4,537       13,464
     Deferred income tax liability                                       1,801
                                                                      --------     --------
            Total current liabilities                                   58,073       67,161

     Deferred rent and other long-term liabilities                       2,096        4,476
     Revolving credit agreement                                        157,000      203,995
     Long-term debt less current maturities                              2,807       15,580
     Deferred income taxes                                               2,587
     Convertible subordinated notes                                     74,750       74,750
                                                                      --------     --------
            Total liabilities                                          297,313      365,962
                                                                      --------     --------

  Commitments and contingencies (Notes 3, 4 and 6)

  Stockholders' equity:
     Common stock, $.01 par value, 100,000,000 shares authorized, 19,769,059 and
     20,339,409 shares issued and outstanding,
     respectively                                                          198          203
  Additional paid-in capital                                           147,006      149,639
  Retained earnings                                                     40,326        9,782
                                                                      --------     --------
            Total stockholders' equity                                 187,530      159,624
                                                                      --------     --------
  Total liabilities and stockholders' equity                          $484,843     $525,586
                                                                      ========     ========
</TABLE>

See Notes To The Consolidated Financial Statements.


                                                                             F-3


<PAGE>

                               JUMBOSPORTS INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS


(IN THOUSANDS EXCEPT FOR PER SHARE DATA)


<TABLE>
<CAPTION>
                                                  Fiscal    Fiscal     Fiscal
                                                   1994      1995       1996
                                                 --------  --------   --------
 <S>                                             <C>       <C>        <C>
 Sales                                           $383,600  $525,762   $624,019
 Cost of sales including buying
    and occupancy costs                           283,908   395,208    505,062
                                                 --------  --------   --------
 Gross profit                                      99,692   130,554    118,957

 Selling, general and administrative  expenses     69,207   106,233    124,918
 Non-recurring and other charges                              2,096     22,568
                                                 --------  --------   --------
 Income (loss) from operations                     30,485    22,225    (28,529)
 Interest expense, net                              4,815    11,254     19,890
                                                 --------  --------   --------
 Income (loss) before provision (benefit) for
    income taxes and extraordinary item            25,670    10,971    (48,419)
 Provision (benefit) for income
    taxes                                           9,775     3,975    (17,875)
                                                 --------  --------   --------
 Income (loss) before extraordinary item           15,895     6,996    (30,544)
 Extraordinary item (less applicable income tax
    benefit of $111)                                 (181)
                                                 --------  --------   --------
 Net income (loss)                               $ 15,714  $  6,996   $(30,544)
                                                 ========  ========   ========

 Primary and fully diluted
    earnings per common share
       Income (loss) before extraordinary item   $   0.84  $   0.35   $  (1.53)
       Extraordinary item                           (0.01)
                                                 --------  --------   --------
 Net income (loss) per share                     $   0.83  $   0.35   $  (1.53)
                                                 ========  ========   ========
</TABLE>




See Notes To The Consolidated Financial Statements.






                                                                             F-4


<PAGE>


                               JUMBOSPORTS INC.
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


(IN THOUSANDS EXCEPT FOR SHARE DATA)



<TABLE>
<CAPTION>

                                        Common Stock       Additional
                                    ---------------------   paid-in    Retained
                                      Shares    Par Value   capital    earnings   Total
                                    ----------  ---------  ----------  --------  --------
<S>                                 <C>         <C>          <C>       <C>       <C>
Balance, January 30, 1994           11,796,335  $     118    $ 99,645  $ 17,616  $117,379
Issuance of common stock             2,023,902         20      46,805              46,825
Three-for-two stock split            5,902,680         59         (59)
Tax benefit of exercise of options                                204                 204
Net income                                                               15,714    15,714
                                    ----------  ---------    --------  --------  --------

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
                                    ==========  =========    ========  ========  ========
</TABLE>



See Notes To The Consolidated Financial Statements.



                                                                             F-5

<PAGE>


                               JUMBOSPORTS INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>

(IN THOUSANDS EXCEPT FOR SHARE DATA)
                                                                    Fiscal    Fiscal    Fiscal
                                                                     1994      1995      1996
                                                                   --------  --------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                <C>       <C>        <C>
Net income (loss)                                                  $ 15,714  $  6,996   $(30,544)
Adjustments to reconcile  net income to net cash provided by (used in) operating
    activities:
      Depreciation                                                    4,187     6,258      8,656
      Gain on asset sales                                                        (179)      (478)
      Amortization of cost in excess of the fair value of
        net assets acquired                                             342       342        342
      Deferred loan cost and other amortization                         439       509      1,048
      Deferred loan cost write off                                      292
      Non-recurring and other charges                                           2,096     22,568
      Increase in deferred tax asset                                                      (1,586)
      Increase (decrease) in deferred income tax expense              2,297     1,255     (4,388)
      Decrease (increase) in accounts receivable                     (1,925)     (595)     2,589
      Decrease (increase) in inventories                            (68,608)  (42,548)    35,144
      Increase in prepaid expenses                                     (474)     (483)    (2,000)
      Increase in income tax receivable                                                  (11,386)
      Decrease (increase) in other assets                            (2,420)      235     (1,818)
      Increase (decrease) in accounts payable                          (130)   14,161     (7,278)
      Increase (decrease) in accrued expenses                           727     1,455       (133)
      Increase (decrease) in other current liabilities                1,072     2,472       (300)
      Increase in deferred rent and other long term liabilities         623       273      2,380
      Increase (decrease) in income taxes payable                         6    (1,029)       398
                                                                   --------  --------   --------
        Net cash provided (used) in operating activities            (47,858)   (8,782)    13,214
                                                                   --------  --------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                            (89,610)  (60,738)   (15,236)
    Sale leaseback proceeds                                                                2,150
    Net collections under note receivable                               332       462         31
    Cash proceeds from sale of property                                           429      1,220
                                                                   --------  --------   --------
        Net cash used in investing activities                       (89,278)  (59,847)   (11,835)
                                                                   --------  --------   --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from sale of common stock, net                          46,825       295      1,118
    Tax benefit of options exercised                                    204       117      1,033
    Proceeds from mortgage financing                                                      13,039
    Net borrowings (repayments) under revolving credit agreements    89,721    67,279    (11,065)
    Repayments of long term debt                                       (372)     (376)      (578)
    Loan and other financing costs                                     (525)              (3,572)
                                                                   --------  --------   --------
        Net cash provided (used) by financing activities            135,853    67,315        (25)
                                                                   --------  --------   --------
    Net increase (decrease) in cash and cash equivalents             (1,283)   (1,314)     1,354
                                                                   --------  --------   --------
    Cash and cash equivalents, beginning of period                    6,187     4,904      3,590
                                                                   --------  --------   --------
    Cash and cash equivalents, end of period                       $  4,904  $  3,590   $  4,944
                                                                   ========  ========   ========

Supplemental Disclosure Cash Flow Information Cash paid during year for:
      Interest (net of amounts capitalized)                        $  4,187  $ 10,589   $ 19,482
      Income taxes                                                 $  7,472  $  3,749   $     40
</TABLE>



See Notes To The Consolidated Financial Statements.


                                                                             F-6
<PAGE>

                               JUMBOSPORTS INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization

     JumboSports Inc. and its subsidiaries  (the "Company")  previously Sports &
Recreation, Inc., operates 85 retail sporting goods outlets in 29 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 periods ended
January 29, 1995 ("Fiscal  1994") and January 28, 1996  ("Fiscal  1995") and for
the 52 week and five day period ended January 31, 1997 ("Fiscal 1996").

     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.  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  $6,254  and  $5,128 in  Fiscal  1995 and  Fiscal  1996,
respectively.

     Property and Equipment

     Property  is recorded at cost and  includes  interest on funds  borrowed to
finance construction.  Capitalized interest was approximately $1,869, $2,476 and
$135 in Fiscal 1994, Fiscal 1995 and Fiscal 1996, respectively. Depreciation and
amortization  are provided  using the  straight-line  method over the  estimated
useful service lives of the related assets which range from three to 39.5 years.
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.

     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 which those  temporary
differences are expected to be recovered or settled. The Company's

                                                                             F-7
<PAGE>

differences  relate  primarily to the  difference in carrying  values of certain
assets and  liabilities  for book and tax reporting and the deferred  income tax
liability  resulting  from the  Company's  change in fiscal  1991 from  last-in,
first-out  (LIFO) method of inventory  valuation to the FIFO method.  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 1994, Fiscal
1995  and  Fiscal  1996  are  $6,897,  $10,420  and  $13,309,  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 $2,223 and $2,217 in Fiscal 1995 and Fiscal 1996, respectively.

     Impairment of Assets

     FAS 121, "Accounting for Impairment of Long-Lived Assets to be Disposed of"
(FAS 121),  effective for years beginning after December 15, 1995, required 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 $5.2 million pre-tax
charge as part of the $22.6  million  charge it took in the  second  quarter  of
Fiscal 1996.

     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 $2,178 and $2,520 as of January 28, 1996
and January 31, 1997 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  $44
million and $55 million at January 28, 1996 and January 31, 1997 respectively.

     Risk Management Instruments

     The Company, in connection with its revolving credit facility,  has entered
into $100 million of interest rate collar  agreements.  These agreements qualify
for hedge accounting and are amortized to interest expense.  The $100 million of
interest rate collars impacted interest expense in fiscal 1996 by $15.

     The fair value of the Company's $100,000 of interest rate collar agreements
at year end was $150.

     Earnings Per Common Share

     Earnings per common and common  equivalent shares are based on the weighted
average number of common and common  equivalent shares  outstanding  during each
year as follows:

<TABLE>
<CAPTION>
                                      Weighted Average
                           Year      Shares Outstanding
                        -------------------------------
                        <S>               <C>
                        Fiscal 1994       18,844,412
                        Fiscal 1995       20,062,155
                        Fiscal 1996       19,984,993
</TABLE>

                                                                             F-8
<PAGE>

     The weighted average number of shares outstanding for Fiscal 1994 have been
restated to reflect the three-for-two  common stock split declared on August 24,
1994, in the form of a 50% stock dividend payable on or about September 26, 1994
(see Note 10).

     Reclassifications and Restatements

     Certain Fiscal 1994 and Fiscal 1995 amounts were  reclassified  or restated
to conform with the current year presentation.


NOTE 2 - PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

<TABLE>
<CAPTION>
                             January 28, January 31,
                                    1996 1997
                                                    -----------  -----------
    <S>                                                <C>          <C>
    Land                                               $ 82,811     $100,336
    Buildings                                            88,851      118,454
    Furniture, fixtures and equipment                    23,764       32,694
    Leasehold improvements                               28,963       44,809
    Assets held under capital lease                       4,700        2,129
    Construction in-process                               6,912        9,739
                                                    -----------  -----------
           Total property and equipment                 236,001      308,161
    Less accumulated depreciation and amortization       17,732       25,510
                                                    -----------  -----------
           Property and equipment, net                 $218,269     $282,651
                                                    -----------  -----------
</TABLE>


NOTE 3 - REVOLVING CREDIT AGREEMENT

     At January 31, 1997, the Company has a $271,000  secured  revolving  credit
facility  (reduced from $285,000 as a result of certain mortgage  financings and
property  sales made during the year) which matures on June 4, 1998.  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 100 basis points (9.25% at January 31, 1997) or LIBOR plus 200 basis points
(7.69% at  January  31,  1997).  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 $271,000 or the
borrowing base. The borrowing base is a calculation  based upon eligible assets:
real estate,  inventories and equipment.  As of January 28, 1996 and January 31,
1997 the  Company had  $157,000  and  $203,995,  respectively,  outstanding  and
$43,000 and $36,034, 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 28, 1996 and January 31, 1997,
outstanding  commitments  under  the  letter of  credit  facility  were $810 and
$2,065, respectively.

     In conjunction with the revolving credit facility,  the Company has entered
into $100 million of interest rate collar  agreements.  These  agreements  hedge
interest  rate  fluctuations  by  setting  floor  rates and  ceiling  rates on a
notional amount of $100 million.

     The  Company has $50  million of  agreements  with floor rates of 5.23% and
ceiling rates of 8.00% and $50 million 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.

                                                                             F-9
<PAGE>

     During  Fiscal 1994,  the Company  consolidated  and  increased it existing
credit  facilities  into  a  $200,000  credit  facility.  As a  result  of  this
renegotiation  of the Company's  credit  facilities,  the Company  expensed $292
($181 net of tax) in  unamortized  deferred  loan costs  relating  to the credit
facilities  which  existed  prior  to  Fiscal  1994,  which  is  included  as an
extraordinary charge in the Company's  Consolidated  Statement of Operations for
Fiscal 1994.

     As of January  31,  1997,  the Company  was in  compliance  with its credit
facility covenants.

<TABLE>
<CAPTION>
NOTE 4 - LONG-TERM DEBT
                                                                  January 28,  January 31,
                                                                      1996        1997
                                                                  -----------  -----------
<S>                                                                    <C>         <C>
    Obligations under real estate capital leases for two store
      facilities with interest imputed at approximately 12.75%
      per annum.  The agreements require monthly payments of
      $25 including interest through September 2012.                   $2,715      $ 2,748
    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             589           80
    Mortgage obligations for four store facilities with interest
      at 8.99% per annum.  The agreement requires monthly
      payments of $110 including interest through June 2008                         12,937
                                                                       ------      -------
    Total debt                                                          3,304       15,765
      Less current maturities                                             497          185
                                                                       ------      -------
    Total long-term debt                                               $2,807      $15,580
                                                                       ======      =======
</TABLE>

     Future minimum  payments  under the capital lease and mortgage  obligations
during the fiscal years subsequent to January 31, 1997 are as follows:

<TABLE>
                       <S>                        <C>
                        1997                      $ 1,700
                        1998                        1,639
                        1999                        1,678
                        2000                        1,678
                        2001                        1,694
                        Thereafter                 24,260
                                                  -------
                       TOTAL                       32,649

                        Less amount
                          representing interest    16,884
                                                  -------
                        Present value of future
                          minimum lease payments   15,765
                        Less current maturities       185
                                                  -------
                       TOTAL                      $15,580
                                                  =======
</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.

                                                                            F-10
<PAGE>


NOTE 6 - COMMITMENTS AND CONTINGENCIES

     Related Party Operating Leases

     The Company leases six retail stores and its administrative office facility
from a  formerly  related  partnership  trust  owned  by the  former  CEO  under
non-cancelable  operating  lease  agreements  expiring in various  years through
2007,  with  options to renew  ranging from three to four  additional  five year
terms.  Under these agreements,  monthly lease payments are required in addition
to contingent  rents  computed as a percentage of sales in excess of a specified
amount.  Contingent  rent paid for Fiscal 1994,  Fiscal 1995 and Fiscal 1996 was
$79, $130 and $96  respectively.  No contingent  rent remained unpaid at January
29, 1995,  January 28, 1996 or January 31, 1997 on these  leases.  Additionally,
the Company has paid security deposits of $140 in connection with these leases.

     Additional Related Party Lease

     The Company  leases one store facility from an entity which is 80% owned by
the formerly related  partnership trust owned by the former CEO discussed above.
The lease  expires in 1997 with options to renew for four  additional  five year
terms and has been accounted for as an operating  lease. The Company is required
to pay  contingent  rent  computed  as a  percentage  of  sales in  excess  of a
specified  amount.  Contingent rent for Fiscal 1994, Fiscal 1995 and Fiscal 1996
was $62, $31 and $0, respectively. No contingent rent remained unpaid at January
29, 1995, January 28, 1996 or January 31, 1997 on this lease.

     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 a Tax Retention Operating Lease "TROL"
financing  facility 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 $58.1 million.  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 additional leases on 18 store facilities and two warehouses
with  unrelated  parties.  These leases have terms  ranging from 10 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.  No  contingent  rent was
incurred for Fiscal 1994 or Fiscal 1995 on these leases.  Contingent  rent of $8
was incurred for Fiscal 1996.

     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.

     Rent expense under all operating  lease  agreements  for each of the fiscal
periods presented is as follows:


                                                                            F-11
<PAGE>

<TABLE>
<CAPTION>
                         Related Party   Additional    TROL & Other
                           Operating    Related Party   Operating
               Year         Leases          Lease         Leases
            -----------  -------------  -------------  ------------
            <S>              <C>              <C>        <C>
            Fiscal 1994      $1,838           $232       $ 6,676
            Fiscal 1995       1,917            630        10,054
            Fiscal 1996       1,665            160        12,311
</TABLE>

     Future  minimum lease  payments under all  non-cancelable  operating  lease
agreements  during the  fiscal  years  subsequent  to  January  31,  1997 are as
follows:

<TABLE>
                                     <S>         <C>
                                     1997        $10,143
                                     1998          7,872
                                     1999          6,943
                                     2000          6,506
                                     2001          6,481
                                     Thereafter   47,499
                                                 -------
                                     TOTAL       $85,444
                                                 =======

</TABLE>

     New Store Construction

     The Company  has  previously  utilized  one  construction  agent as general
contractor for substantially  all of its new store facilities.  The agent worked
solely for the Company.  Future  construction  will be subject to a  competitive
bidding process.


NOTE 7 - 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 25% 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 reduction contributions are immediately
vested in full; matching and discretionary contributions begin to vest after the
participant's   third  year  of  service  and  become  fully  vested  after  the
participant's seventh year of service.  During fiscal years 1994, 1995 and 1996,
expense under the Plan was approximately $158, $81 and $62, 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.


NOTE 8 - INCOME TAXES

     Income tax expense (benefit) consists of the following:


<TABLE>
<CAPTION>
                                 Fiscal  Fiscal   Fiscal
                                  1994    1995     1996
                                ------  ------  ---------
                      <S>       <C>     <C>     <C>
                      Current   $7,478  $2,720  $(10,875)
                      Deferred   2,297   1,255    (7,000)
                                ------  ------  --------
                                $9,775  $3,975  $(17,875)
                                ======  ======  ========
</TABLE>

                                                                            F-12
<PAGE>

     The  following is a schedule of the  significant  net  deferred  income tax
assets and liabilities as of January 28, 1996 and January 31, 1997:

<TABLE>
<CAPTION>
                                                          January 28,  January 31,
                                                             1996         1997
                                                          -----------  -----------
<S>                                                       <C>          <C>
Net Current Deferred Income Tax Asset (Liability):
    Inventory basis difference between tax and
        financial reporting                                   $(3,576)     $(2,890)
    Accrued expenses not deductible for tax
        reporting until paid                                    1,775        5,912
    Other                                                                       43
                                                          -----------  -----------
Total current deferred income tax asset (liability), net       (1,801)       3,065
                                                          -----------  -----------

Net Non-Current Deferred Income Tax Asset (Liability):
    Accelerated tax depreciation                               (2,721)      (5,188)
    Tax benefit carryovers                                                   3,071
    Accrued expenses not deductible for tax reporting
        until paid                                                             557
    Other                                                         134           81
                                                          -----------  -----------

Total non-current deferred income tax, net                     (2,587)     $(1,479)
                                                          -----------  -----------

    Total net deferred tax asset (liability)                  $(4,388)     $ 1,586
                                                          ===========  ===========
</TABLE>

     At January  31,  1997,  the  Company  had tax net  operating  loss  ("NOL")
carryforwards  of $400 for regular  federal  income tax purposes and $26,800 for
state income tax purposes.  The federal NOL will expire,  if unused, in the Year
2011 and the state NOL's will expire, if unused, in the Years 2001 through 2011.
In addition,  the Company had tax credit carryforwards of $2,000 for alternative
minimum taxes, which are carried forward  indefinitely The Company believes that
it is more likely than not that all of the NOL and tax credit carryforwards will
be utilized prior to their expiration.

     The Company's income tax expense  differed from the statutory  federal rate
of 35% for Fiscal 1994, 34% for Fiscal 1995 and 34% for Fiscal 1996, as follows:


<TABLE>
<CAPTION>
                                                          Fiscal  Fiscal   Fiscal
                                                           1994    1995     1996
                                                          ------  ------  ---------
<S>                                                       <C>     <C>      <C>
Income taxes (benefits) using the federal statutory rate  $8,985  $3,730   $(16,462)
Increase in taxes resulting from:
    State taxes                                              767     162     (1,937)
    Goodwill amortization                                    120     116        130
    Amortization of intangible assets                        (13)
    Tax exempt interest income                                (4)
    Targeted jobs tax credit                                 (42)    (33)
    Other differences, net                                   (38)               394
                                                          ------  ------   --------
TOTAL                                                     $9,775  $3,975   $(17,875)
                                                          ======  ======   ========
</TABLE>



                                                                            F-13
<PAGE>


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 million. The components are as follows:


<TABLE>
              <S>                                            <C>
              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
                                                             =====

</TABLE>

     The   disposition  of  and  impairment  of   underperforming   assets  were
attributable  to the  write-off of  undesirable  retail sites and  impairment of
other sites and the write-off of assets as the result of organizational changes.

     Charges  for  certain  loss  contingencies   relate  to  the  October  1996
submission  of  settlement  without  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
will be  certified  by the court and  prorata  payments  in the total  amount of
$6,250 will be made to the class  members  submitting  claims.  Of this  amount,
$2,875 will be funded by the Company and the  remainder  funded by the Company's
insurance carrier.

     Other  charges  were   attributable  to  costs  incurred  in  the  February
management change for severance and related charges $1,800, for employee benefit
program changes $4,300 and for other charges $2,100.  Cash payments of $900 were
paid in fiscal 1996 and an additional  $900 of cash payments will be realized in
future periods.

<TABLE>
<CAPTION>

     Remaining  reserves  at  year-end  attributable  to these  charges  were as
follows:
            <S>                                                      <C>
            Disposition and impairment of underperforming assets     $3.0
            Asset impairments the result of organizational changes    4.0
            Other charges                                             5.2
                        Total remaining reserves                    $12.2

</TABLE>


                                                                            F-14

<PAGE>

     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 $483.

     In  February  1996,  the  former  CEO and  Chairman  stepped  down from his
position as CEO. In conjunction with this departure, as well as the retainage of
the new President,  Chairman,  and CEO, certain charges for severance,  bonuses,
legal and other related  charges were recognized in Fiscal 1995 in the amount of
$1,500.


NOTE 10 - STOCKHOLDERS' EQUITY

     The Company  completed an initial  public  offering of 8,625,000  shares of
common stock on September 16, 1992 (the "IPO"),  of which 6,270,000 were sold by
the Company and 2,355,000 by certain selling stockholders.

     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.

     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.  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 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 2,212,212 shares for distribution under the 1989 Plan.

     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 552,538  shares  were
granted to employees thereunder,  as of January 31, 1997. Vesting provisions are
similar under both the 1989 Plan and the 1996 Plan. Options granted to employees
generally  become  exerciseable  after one year in 25%  increments  per year and
expire 10 years from the date of grant.




                                                                            F-15
<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 30, 1994  1,266,074   $ 3.95 - 15.83      $ 8.39
         Granted                     320,250    24.33 - 29.33       22.74
         Exercised                   (26,853)    3.95 - 15.83        4.61
         Canceled or surrendered     (26,598)   11.67 - 26.08       20.81
                                   ---------   --------------      ------
     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
         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
                                   =========   ==============      ======
     Shares Exerciseable             627,931                       $ 4.13
                                   =========                       ======
</TABLE>

     In October 1995, the Financial  Accounting Standards Board issued Financial
Accounts Standard No.123,  "Accounting for Stock Based Compensation" ("FAS 123")
which is  effective  for fiscal years  beginning  after  December  15, 1995.  As
permitted  by FAS 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 FAS 123, net income and earnings per share would have been reduced
to the proforma amounts shown below: 
<TABLE>
<CAPTION>
                                         Fiscal     Fiscal
                                           1995       1996
                                         ------  ---------
                     <S>                 <C>     <C>
                     Net income (loss)
                       As reported       $6,996  $(30,544)
                       Proforma          $6,438  $(33,437)

                     Earnings per share
                       As reported       $ 0.35  $  (1.53)
                       Proforma          $ 0.32  $  (1.67)
</TABLE>
     The proforma  amounts were  determined  using the  Black-Scholes  Valuation
Model with the following key  assumptions:  (i) a discount rate of 7.0% for 1995
and 1996; (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  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 the former CEO and  Chairman 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 new President,
CEO and Chairman 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 a result of the February  1996
management change, options were canceled and re-issued to new management.

                                                                            F-16
<PAGE>

NOTE 11 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     Summarized  quarterly  financial data for Fiscal 1996 and Fiscal 1995 is as
follows:


<TABLE>
<CAPTION>
                                        First     Second     Third     Fourth
                                      ---------  ---------  --------  --------
  <S>                                 <C>        <C>        <C>       <C>
  1996
  Net sales                           $143,658   $169,014   $136,798  $174,549
  Gross profit                          32,823      8,535     35,934    41,665
  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
                                      ========   ========   ========  ========

  1995
  Net Sales                           $110,742   $124,935   $117,909  $172,176
  Gross profit                          25,990     32,938     28,884    42,740
  Net income                             1,718      3,741        551       986
  Primary and fully diluted earnings
      per common share:
  Net income                          $   0.09   $   0.19   $   0.03  $   0.05
                                      ========   ========   ========  ========
</TABLE>





                                                                            F-17