<PAGE>
 
                     SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D.C. 20549

                                  FORM 10-Q

(Mark one)

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

       For the quarterly period ended November 1, 1997

                                     OR

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

       For the transition period from _______________  to  _______________


Commission file number 000-21543


                      Wilsons The Leather Experts Inc.
-------------------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)

                 Minnesota                              41-1839933
     -------------------------------                 ------------------
     (State or other jurisdiction of                  (I.R.S. Employer
      incorporation or organization)                 Identification No.)  

     7401 Boone Ave. N., Brooklyn Park, MN                 55428
    ----------------------------------------            -----------
    (Address of principal executive offices)             (Zip Code)  


     Registrant's telephone number, including area code:  (612) 391-4000

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

The number of shares outstanding of the Registrant's common stock as of December
12, 1997 was 9,532,083 shares.
<PAGE>
 
                      WILSONS THE LEATHER EXPERTS INC.
                                    INDEX


PART I - FINANCIAL INFORMATION                                          PAGE

     Item 1.  Condensed Consolidated Financial Statements

              Consolidated Balance Sheets -
                November 1, 1997 and February 1, 1997                     3

 
              Consolidated Statements of Operations -
                Thirteen weeks ended November 1, 1997,
                thirteen weeks ended November 2, 1996,
                thirty-nine weeks ended November 1, 1997,
                forty weeks ended November 2, 1996,
                seventeen weeks ended May 25, 1996 and
                twenty-three weeks ended November 2, 1996                 4
 
              Condensed Consolidated Statements of Cash Flows -
                Thirty-nine weeks ended November 1, 1997,
                seventeen weeks ended May 25, 1996 and
                twenty-three weeks ended November 2, 1996                 6
 
              Notes to Condensed Consolidated Financial Statements        7
 
 
     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations              11
 
     Item 3.  Quantitative and Qualitative Disclosures About Market Risk 18
 
PART II - OTHER INFORMATION
 
     Item 2.  Changes in Securities and Use of Proceeds                  19
 
     Item 6.  Exhibits and Reports on Form 8-K                           19
 
     Signature                                                           21
 
     Index to Exhibits                                                   22

                                       2
<PAGE>


              Wilsons The Leather Experts Inc. and Subsidiaries
                         Consolidated Balance Sheets
             (In Thousands, Except Share and Per Share Amounts)

<TABLE>
<CAPTION>

                                                             November 1           February 1
                        Assets                                  1997                1997
                                                             -----------         -----------
                                                             (Unaudited)     
<S>                                                          <C>                  <C>
Current Assets:                                                              
 Cash and cash equivalents                                    $   5,370           $  81,553
 Accounts receivable, net                                        12,234               4,851
 Inventories                                                    140,132              64,919
 Prepaid expenses                                                 1,515               1,246
 Income tax benefits                                              1,760                   -
                                                             -----------         -----------
            Total current assets                                161,011             152,569
                                                                             
Property and equipment, net                                      21,572              17,091
Other assets, net                                                 3,830               1,555
Deferred income taxes                                               113               1,173
                                                             -----------         -----------
            Total assets                                      $ 186,526           $ 172,388
                                                             ===========         ===========
                                                                             
                                                                             
             Liabilities and Shareholders' Equity                                         
                                                                             
Current Liabilities:                                                         
 Accounts payable                                             $  16,305           $  10,666
 Notes payable                                                   20,135                   -
 Accrued expenses                                                31,680              34,517
 Income taxes payable                                                 -              20,345
 Deferred income taxes                                            6,380               3,243
                                                             -----------         -----------
            Total current liabilities                            74,500              68,771
                                                                             
Long-term debt                                                   75,000              55,811
Other long-term liabilities                                         944               4,341
                                                             -----------         -----------
                                                                             
Shareholders' Equity:                                                        
 Preferred stock, $.01 par value; 10,000,000 shares authorized,              
   7,405 ($1,000 stated value) shares issued and outstanding                
   on February 1, 1997                                                -               7,405
 Common stock, $.01 par value; 45,000,000 shares authorized,                 
   9,532,083 and 7,650,000 shares issued and outstanding on                  
   November 1, 1997 and February 1, 1997, respectively               95                  77
 Additional paid-in capital                                      37,851              12,501
 Retained earnings (deficit)                                     (1,827)             23,511
 Cumulative translation adjustment                                  (37)                (29)
                                                             -----------         -----------
            Total shareholders' equity                           36,082              43,465
                                                             -----------         -----------
            Total liabilities and shareholders' equity        $ 186,526           $ 172,388
                                                             ===========         ===========
</TABLE>

                The accompanying notes are an integral part of 
                      these consolidated balance sheets.




                                       3



<PAGE>
 
               Wilsons The Leather Experts Inc. and Subsidiaries
                     Consolidated Statements of Operations
                   (In Thousands, Except Per Share Amounts)
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                  Thirteen          Thirteen
                                                   Weeks              Weeks
                                                   Ended              Ended
                                                  November 1       November 2
                                                    1997              1996
                                               --------------    -------------
<S>                                             <C>               <C>
Net sales                                            $ 81,272         $ 86,363

Costs and expenses:
 Cost of goods sold, buying and occupancy costs        57,520           62,042
 Selling, general and administrative expenses          23,855           23,318
 Depreciation and amortization                            596               69
 Restricted stock compensation expense                  7,611                -
                                               --------------    -------------
                Income (loss) from operations          (8,310)             934

Interest expense, net                                   2,521            2,436
                                               --------------    -------------
                Loss before income taxes              (10,831)          (1,502)

Income tax benefit                                     (1,179)            (492)
                                               --------------    -------------
                Loss before extraordinary item         (9,652)          (1,010)

Extraordinary gain on early extinguishment
 of debt, net of tax of $2,509                          3,763                -
                                               --------------    -------------
                Net loss                              ($5,889)         ($1,010)
                                               ==============    =============



Net loss per common share:
 Loss before extraordinary item                        ($0.88)          ($0.11)
 Extraordinary gain on early extinguishment
   of debt, net of tax                                   0.34                -
                                               --------------    -------------
Net loss per common share                              ($0.54)          ($0.11)
                                               ==============    =============

Weighted average common shares outstanding             10,917            8,987
                                               ==============    =============
</TABLE> 
The accompanying notes are an integral part of these consolidated financial 
statements.

                                       4
<PAGE>
 
               Wilsons The Leather Experts Inc. and Subsidiaries
                     Consolidated Statements of Operations
                   (In Thousands, Except Per Share Amounts)
                                  (Unaudited)

<TABLE>
<CAPTION> 

                                                                  (Combined       (Predecessor
                                                (Company)         Companies)       Companies)     (Company)
                                               Thirty-nine          Forty          Seventeen    Twenty-three
                                                  Weeks             Weeks            Weeks          Weeks
                                                  Ended             Ended            Ended          Ended
                                               November 1         November 2         May 25      November 2
                                                  1997               1996             1996          1996
                                              -----------       ------------      ------------  ------------
<S>                                            <C>               <C>                <C>          <C>
Net sales                                        $174,694           $194,576           $79,695      $114,881

Costs and expenses:
 Cost of goods sold, buying and occupancy costs   141,742            152,978            64,737        88,241
 Selling, general and administrative expenses      60,346             64,598            27,448        37,150
 Depreciation and amortization                      1,538              3,885             3,814            71
 Restricted stock compensation expense              8,511                  -                 -             -
                                              -----------       ------------      ------------  ------------
                Loss from operations              (37,443)           (26,885)          (16,304)      (10,581)

Interest expense, net                               4,440              4,834             1,250         3,584
                                              -----------       ------------      ------------  ------------
                Loss before income taxes          (41,883)           (31,719)          (17,554)      (14,165)

Income tax benefit                                (12,387)           (11,609)           (6,561)       (5,048)
                                              -----------       ------------      ------------  ------------
                Loss before extraordinary item    (29,496)           (20,110)          (10,993)       (9,117)

Extraordinary gain on early extinguishment
 of debt, net of tax of $2,509                      3,763                  -                 -             -
                                              -----------       ------------      ------------  ------------
                Net loss                         ($25,733)          ($20,110)         ($10,993)      ($9,117)
                                              ===========       ============      ============  ============



Net loss per common share:
 Loss before extraordinary item                    ($2.93)
 Extraordinary gain on early extinguishment
   of debt, net of tax                               0.38
                                              -----------   
Net loss per common share                          ($2.55)
                                              ===========

Weighted average common shares outstanding         10,073
                                              ===========
</TABLE> 
The accompanying notes are an integral part of these consolidated financial 
statements.

                                       5
<PAGE>
 

               Wilsons The Leather Experts Inc. and Subsidiaries
                Condensed Consolidated Statements of Cash Flows
                                (In Thousands)
                                  (Unaudited)


<TABLE> 
<CAPTION> 

                                                                                  (Predecessor
                                                                 (Company)         Companies)       (Company)
                                                                Thirty-nine        Seventeen       Twenty-three
                                                                   Weeks             Weeks            Weeks
                                                                   Ended             Ended            Ended
                                                                 November 1          May 25         November 2
                                                                    1997              1996             1996
                                                               -------------     -------------    --------------- 
<S>                                                            <C>               <C>              <C>
OPERATING ACTIVITIES:
 Net loss                                                        $  (25,733)       $  (10,993)       $   (9,117)
                                                                                                 
 Adjustments to reconcile net loss to net cash used in                                           
  operating activities-                                                                          
  Extraordinary gain on early extinguishment of debt                 (3,763)                -                 -
  Restructuring charges paid                                              -            (5,957)                -
  Depreciation and amortization                                       1,538             3,814                71
  Amortization of deferred financing costs                              590                 -               278
  Loss on disposal of assets                                             30               184                 -
  Restricted stock compensation expense                               8,511                 -                 -
  Deferred income taxes                                               4,197             5,115            (4,939)
  Changes in operating assets and liabilities, net of                                            
     assets and liabilities acquired:                                                            
          Accounts receivable, net                                   (7,383)             (222)           (8,021)
          Inventories                                               (75,213)           14,410           (65,601)
          Prepaid expenses                                           (1,590)              114            (6,401)
          Other noncurrent assets                                         -                 4                 -
          Accounts payable and accrued expenses                       2,610            (9,689)            5,048
          Income taxes payable and other liabilities                (22,511)          (11,965)            2,770
                                                                 ----------        ----------        ---------- 
                    Net cash used in operating activities          (118,717)          (15,185)          (85,912)
                                                                 ----------        ----------        ----------
                                                                                                 
INVESTING ACTIVITIES:                                                                            
  Additions to property, equipment and other noncurrent assets       (6,049)           (3,430)           (3,283)
  Acquisitions, net of cash acquired                                      -                 -            37,072
                                                                 ----------        ----------        ----------
                                                                                                 
                    Net cash provided by (used in)                                               
                     investing activities                            (6,049)           (3,430)           33,789
                                                                 ----------        ----------        ----------
                                                                                                 
FINANCING ACTIVITIES:                                                                            
  Change in due to/from CVS                                               -          (105,013)                -
  Capital contributed by CVS                                              -           124,000                 -
  Change in notes payable                                            20,135                 -            40,110
  Proceeds from sale of common and preferred stock                    9,452                 -            12,000
  Change in book overdrafts                                           1,899            (4,360)            6,115
  Proceeds from issuance of long-term debt                           72,136                 -                 -
  Repayment of long-term debt                                       (55,039)                -                 -
                                                                 ----------        ----------        ----------
                                                                                                 
                    Net cash provided by financing activities        48,583            14,627            58,225
                                                                 ----------        ----------        ----------
                                                                                                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                (76,183)           (3,988)            6,102
                                                                                                 
CASH AND CASH EQUIVALENTS, beginning of period                       81,553             7,270                 -
                                                                 ----------        ----------        ----------
                                                                                                 
CASH AND CASH EQUIVALENTS, end of period                         $    5,370        $    3,282        $    6,102
                                                                 ==========        ==========        ==========
                                                                                                 
SUPPLEMENTAL CASH FLOW INFORMATION:                                                              
  Noncash investing and financing activities-                                                    
      Liabilities assumed for acquisition of business            $        -        $       -         $   46,927
                                                                 ==========        ==========        ==========
                                                                                                 
      Issuance of long-term debt                                 $        -        $       -         $   55,811
                                                                 ==========        ==========        ==========


</TABLE> 

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






                                       6
<PAGE>
 
              Wilsons The Leather Experts Inc. and Subsidiaries
            Notes to Condensed Consolidated Financial Statements
                                 (Unaudited)


1.  Nature of Organization and Acquisition

     Wilsons The Leather Experts Inc., a Minnesota corporation (Wilsons), was
formed to acquire 100% of the common stock of Wilsons Center, Inc. and its
subsidiaries (the Predecessor Companies prior to the Acquisition) in a
management-led buyout (Acquisition) from CVS New York, Inc., a New York
corporation (CVS; formerly Melville Corporation, the parent company to the
Predecessor Companies).  Wilsons and its wholly owned subsidiaries are
collectively referred to as the Company.  In May 1996, pursuant to a sale
agreement dated May 24, 1996 between Wilsons and CVS, Wilsons acquired the
common stock for (i) $2.0 million in cash, (ii) a 10% senior secured
subordinated note due December 31, 2000 in the principal amount of $55.8
million, (iii) a warrant to purchase 1,350,000 shares of common stock, (iv) a
warrant to purchase 1,080,000 shares of common stock, (v) 4,320,000 shares of
common stock, and (vi) 7,405 shares of Series A Preferred Stock (Series A
Preferred).  As part of the Acquisition, the Leather Investors Limited
Partnerships I and II in turn purchased from CVS the 4,320,000 shares of common
stock and the 7,405 shares of Series A Preferred for $10 million.

     On May 27, 1997, the 7,405 shares of Series A Preferred were exchanged for
617,083 shares of Wilsons' common stock.  On August 18, 1997, the warrant for
1,080,000 shares of common stock lapsed with the vesting of the remaining
Restricted Stock (as defined herein) (see Note 7 and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Overview" in
Part I., Item 2.).

     The Acquisition was accounted for using the purchase method.  The basis of
CVS's 15% equity interest in the Predecessor Companies was carried over to its
equity interest in the Company in accordance with Emerging Issues Task Force
discussion 88-16.  Accordingly, the purchase price of $67.8 million and CVS's
carryover basis has been allocated to the assets acquired and liabilities
assumed based on their estimated fair values.  This resulted in the carrying
value of the net assets acquired exceeding the new basis by approximately $52.5
million, which was applied to reduce the amounts assigned to property and
equipment.

2.  Basis of Financial Statement Presentation

     The consolidated financial statements of the Company include all accounts
of Wilsons The Leather Experts Inc. and its wholly owned subsidiaries.  The
consolidated financial statements prior to May 26, 1996 relate to the
Predecessor Companies before the Acquisition and are not comparable to periods
presented subsequent to the acquisition date due to the effects of certain
purchase accounting adjustments and the acquisition financing.  All intercompany
balances and transactions between the entities have been eliminated in
consolidation.

                                       7
<PAGE>
 
     The combined financial statements for the forty weeks ended November 2,
1996, include the results of operations of both the Predecessor Companies and
the Company and are not intended to represent what the results of operations of
the Company would have been if the Company had operated as a stand-alone
company.

     The accompanying unaudited financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosure, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations. Although management believes that the accompanying disclosures
are adequate to make the information presented not misleading, it is suggested
that these interim financial statements be read in conjunction with the
Company's most recent audited financial statements and related notes included
in its Form S-4 Registration Statement. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary for a
fair presentation of the financial position, results of operations and cash
flows for the interim periods presented have been made. The Company's business
is highly seasonal, and accordingly, interim operating results are not
necessarily indicative of the results that may be expected for the fiscal year
ending January 31, 1998.

     Certain reclassifications have been made to the consolidated financial
statements of the prior year to conform to the 1997 presentation.

3.  Inventories

     Inventories, principally finished goods, consist of merchandise purchased
from domestic and foreign vendors and are carried at the lower of cost or market
value, determined by the retail inventory method on the last-in, first-out
(LIFO) basis.  The difference in inventories between the LIFO and first-in,
first-out (FIFO) method was not material as of November 1, 1997.  The
Predecessor Companies determined cost using the retail inventory method on the
FIFO basis.

4.  Net Loss Per Common Share

     Net loss per common share has been computed by dividing net loss by the
weighted average number of common shares outstanding during the period, and
dilutive common equivalent shares assumed to be outstanding during each period.
Common equivalent shares consist of dilutive options and warrants to purchase
common stock.  However, pursuant to certain rules of the Securities and Exchange
Commission, the calculation also includes equity securities, including options
and warrants, issued within one year of an initial public offering with an issue
price less than the initial public offering price, even if the effect is anti-
dilutive.  The treasury stock method was used in determining the effect of such
issuances.

5.  Initial Public Offering/Conversion of Common Stock to a Single Class

     On May 27, 1997, the Securities and Exchange Commission declared effective
the Company's Registration Statement on Form S-1 relating to the initial public
offering of 

                                       8
<PAGE>
 
1,100,000 units. In addition, the underwriter exercised its over-allotment
option to purchase 165,000 units. Each unit consisted of one share of common
stock and one redeemable warrant to purchase one share of common stock for
$13.50 per share. The Company received net proceeds of $9.5 million after
payment of related underwriting discount and offering costs.

     On June 2, 1997, upon completion of the initial public offering, all shares
of all classes of common stock were converted to a single class of common stock
(the Conversion).  As of February 1, 1997, 4,320,000, 2,925,000, and 405,000
shares of Class A, Class B, and Class C common stock, respectively, were issued
and outstanding.  After the Conversion, and except as hereafter noted, such
shares of common stock have equal rights in all respects, including the right to
one vote per share of common stock for all matters submitted to holders of
common stock for a vote.  However, each shareholder that is subject to the
shareholder agreement dated May 25, 1996 agrees to vote all of the voting shares
of common stock held by such shareholder in favor of the election to the Board
of Directors of two individuals who shall be nominated by a vote of a majority
of the outstanding shares of common stock held by the Employees and their
Permitted Transferees (as defined in the shareholder agreement) and, upon the
vote of a majority of the outstanding shares of common stock held by the
Employees and their Permitted Transferees, to remove or replace such directors,
until the earlier of (i) the completion of an underwritten public offering with
gross proceeds of at least $20 million or (ii) the general termination of the
shareholder agreement, which termination will be no later than May 25, 1998.

6.  Series A Preferred Exchange

     As of May 27, 1997, the holders of the 7,405 shares of Series A Preferred
exchanged their entire holdings of such shares for 617,083 shares of common
stock at an exchange rate of $12.00 per share. In connection with such
exchange, the holders of the Series A Preferred waived their rights to receive
any accrued dividends in respect of such Series A Preferred.

7.  Private Offering of Senior Notes, Extraordinary Gain on Early Extinguishment
    of Debt and Vesting of Restricted Stock

     On August 18, 1997, the Company completed a private offering of $75.0
million of 11 1/4% Series A senior notes due 2004 (Senior Notes) to certain
qualified institutional buyers. Interest on the Senior Notes is payable semi-
annually in arrears on February 15 and August 15 of each year, commencing on
February 15, 1998. The Senior Notes mature on August 15, 2004, unless
previously redeemed, and the Company is not required to make any mandatory
redemption or sinking fund payment prior to maturity. The Senior Notes are
general unsecured obligations of the Company and rank senior in right of
payment to all existing and future subordinated indebtedness of the Company
and rank on equal terms in right of payment with all other current and future
unsubordinated indebtedness of the Company. The indenture governing the Senior
Notes contains numerous operating covenants that limit the discretion of
management with respect to certain business matters, and which place
significant restrictions on, among other things, the ability of the Company to
incur additional indebtedness, to create liens or other encumbrances, to
declare or pay any dividend, to make certain payments or investments, loans
and guarantees and to sell or otherwise dispose of assets and merge or
consolidate with another 

                                       9
<PAGE>
 
entity. The Company used $56.5 million of the net proceeds from the offering
to repurchase the outstanding senior secured subordinated note issued to CVS
in connection with the Acquisition and pay the accrued interest thereon. The
balance of the net proceeds, approximately $15.6 million, will be used for
general corporate purposes, including capital expenditures and additional
store openings.

     As a result of the completion of the repurchase of the note issued to CVS,
the Company realized an extraordinary gain on the early extinguishment of debt
of $3.8 million, net of tax, in the third quarter ended November 1, 1997.  In
addition, the remaining 881,982 shares of Restricted Stock vested immediately
upon repurchase of the note issued to CVS and accrued interest thereon on August
18, 1997 (see "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview" in Part I., Item 2.).  The Company recorded a
non-cash compensation charge of $8.5 million related to such shares which is
equal to the difference between the fair market value of the Restricted Stock on
the date the shares vested, which was $10.25 per share, and the original
purchase price of the Restricted Stock, which was $.60 per share.  $900,000 of
the restricted stock compensation charge was recorded in the twenty-six weeks
ended August 2, 1997 and the remaining $7.6 million of such charge was recorded
in the quarter ended November 1, 1997.

8.  New Accounting Pronouncement

     The Company will adopt in the fiscal year ending January 31, 1998,
Statement of Financial Accounting Standards No. 128 "Earnings per Share" (SFAS
No. 128), which was issued in February 1997.  SFAS No. 128 requires disclosure
of basic earnings per share (EPS) and diluted EPS, which replaces the existing
primary EPS and fully diluted EPS, as defined by APB No. 15.  Basic EPS is
computed by dividing net income by the weighted average number of shares of
common stock outstanding during the year.  Diluted EPS is computed similar to
EPS as previously reported provided that, when applying the treasury stock
method to common equivalent shares, the Company must use its average share price
for the period rather than the more dilutive greater of the average share price
or end-of-period share price required by APB No. 15.

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

     The following discussion of the financial condition and results of
operations of Wilsons The Leather Experts Inc. and its wholly owned subsidiaries
(Wilsons or the Company) should be read in conjunction with the Company's most
recent audited financial statements and related notes included in its Form S-4
Registration Statement under the Securities Act of 1933, as amended, for the
registration of $75 million of 11 1/4% Series B Senior Notes due 2004 to be
exchanged for its outstanding 11 1/4% Series A Senior Notes due 2004.

     The financial statements for the forty weeks ended November 2, 1996, are
for both the Predecessor Companies and the Company and are not intended to
represent what the results of operations of the Company would actually have been
if the Company had operated as a stand-alone company.

Overview

     The Company was organized in May 1996 to acquire 100% of the common stock
of Wilsons Center, Inc. and its subsidiaries (the Predecessor Companies) (the
Acquisition) from CVS New York, Inc., a New York corporation (CVS; formerly
Melville Corporation, the parent company to the Predecessor Companies). In May
1996, the Company, which was ultimately owned by management and an investor
group, acquired such common stock.

     Prior to the Acquisition, the Predecessor Companies were operated as part
of CVS.  The financial statements for the seventeen weeks ended May 25, 1996,
are for the Predecessor Companies.  Such statements, therefore, may not
necessarily reflect the results of operations or the financial condition of the
Company which would have resulted had the Company operated as an independent
company during the reporting period, and are not necessarily indicative of the
Company's future results or financial condition.

     Throughout the late 1980's and early 1990's, as part of the growth strategy
of CVS, the Predecessor Companies pursued a rapid expansion program through
acquisitions and store openings, growing from 227 stores at the end of 1987 to a
peak of 631 stores at the end of 1993.  Beginning in 1993, the Predecessor
Companies' business was negatively affected by the difficult retail apparel
market for mall-based chains, competition and changes in consumer fashion
preferences.  In 1995, the Predecessor Companies initiated a store-closing
program, which resulted in a reduction of the number of stores to 461 by
February 1, 1997.  The stores closed by the Company had not achieved cash flow
targets established by management.

     In connection with the Acquisition, the Company sold 3,330,000 shares of
common stock to certain managers of the Company, including 1,080,000 shares (the
Restricted Stock) that were subject to vesting upon the occurrence of certain
events.  As of February 1, 1997, 198,018 shares of such Restricted Stock had
vested and the Company recorded a $1.5 million non-cash compensation charge
related to such shares.  The remaining 881,982 shares of Restricted Stock vested
on August 18, 1997 upon the repayment of the senior secured subordinated note
issued to

                                       11
<PAGE>
 
CVS in connection with the acquisition. The Company recorded an additional non-
cash compensation charge in the thirty-nine weeks ended November 1, 1997 of
$8.5 million related to such shares which is equal to the difference between
the fair market value of the Restricted Stock on the date the shares vested,
which was $10.25 per share, and the original purchase price of the Restricted
Stock, which was $.60 per share.

     The Company's business is highly seasonal and, accordingly, operating
results for the interim periods described below are not necessarily indicative
of the results that may be expected for a full fiscal year. A majority of the
Company's net sales and operating profit is generated in the peak-selling
season from October through December, which includes Christmas. Wilsons
recorded 55.6% of its sales for the fiscal year ended February 1, 1997 during
the peak-selling season. As a result, the Company's annual operating results
have been, and will continue to be, heavily dependent on the results of its
peak-selling period. Net sales are generally lowest during the period from
April through July, and the Company typically does not become profitable, if
at all, until the fourth quarter of a given year.

     The Company does not believe that inflation has had a material adverse
effect on the results of operations for the periods presented; however, there
can be no assurance that the Company's business will not be affected by
inflation in the future.

Results of Operations for the Third Quarter Ended November 1, 1997 Compared to
the Third Quarter Ended November 2, 1996

     Wilsons opened 10 stores in the third quarter ended November 1, 1997,
compared to one store opening and two store closings in the third quarter ended
November 2, 1996.  As of November 1, 1997, Wilsons operated 462 stores compared
to 476 stores at November 2, 1996.  The 14 fewer stores were a result of closing
stores that did not achieve cash flow targets established by management.
Wilsons regularly supplements its mall-based operations with holiday stores and
seasonal kiosks during its peak-selling period from October through December.
The Company operated 203 seasonal stores as of November 1, 1997 compared to 226
seasonal stores as of November 2, 1996.

     Sales for the third quarter ended November 1, 1997 were $81.3 million
compared with $86.4 million for the same period a year ago, a decrease of $5.1
million, or 5.9%.  Comparable store sales decreased 7.5% due primarily to
unseasonably warm weather in September and the first half of October which
resulted in reduced sales of outerwear.  In addition, the Company operated on
average 21, or 4.4%, fewer stores in the quarter ended November 1, 1997,
compared to the prior year as the Company closed underperforming stores.  Sales
from stores open less than one full year and increased seasonal store sales
partially offset the decline in comparable store sales and the overall reduction
in open stores.

     Cost of goods sold, buying and occupancy costs for the quarter ended
November 1, 1997 were $57.5 million, or 70.8% of sales, compared to $62.0
million, or 71.8% of sales, for the previous year.  Gross margin net of
occupancy costs increased 0.6 points as a percent of sales for the quarter as
compared to the prior year quarter due primarily to reduced markdowns.

                                       12
<PAGE>
 
Occupancy costs for the 1997 period decreased 0.4 points as a percent of sales,
due to operating fewer stores and expense reductions.  The Company's inventories
are valued under the retail inventory method using the last-in, first-out (LIFO)
basis.  The difference in inventories between LIFO and the first-in, first-out
(FIFO) method was not material as of November 1, 1997.  Interim period inventory
determinations are partially based on assumptions as to future inventory levels
at the end of the fiscal year and expected rates of inflation for the year which
may impact future financial results.

     Operating expenses for the quarter ended November 1, 1997 were $32.1
million, or 39.5% of sales, compared to $23.4 million, or 27.1% of sales, for
the quarter ended November 2, 1996.  Operating expenses in the quarter ended
November 1, 1997 include a $7.6 million non-cash compensation charge associated
with the vesting of the remaining 881,982 shares of Restricted Stock (see
"Overview").  Operating expenses excluding the $7.6 million non-cash
compensation charge increased $1.1 million due primarily to increased
depreciation expense associated with new store openings and remodels and
implementing certain new information systems, and the timing of marketing and
promotional expenses.

     As a result of the above, Wilsons had a loss from operations of $8.3
million for the quarter ended November 1, 1997, compared to income from
operations of $0.9 million for the quarter ended November 2, 1996.

     Net interest expense for the quarter ended November 1, 1997 was $2.5
million, or 3.1% of sales, compared to $2.4 million, or 2.8% of sales, last
year.

     Income tax benefit for the quarter ended November 1, 1997 was $1.2
million, or 1.5% of sales, compared to a $0.5 million income tax benefit, or
0.6% of sales, for the quarter ended November 2, 1996. The effective tax rate
decreased in 1997 to a 10.9% tax rate from a 32.8% tax rate in 1996 due
primarily to the non-deductibility of the $7.6 million restricted stock
compensation expense.

     The Company realized a $3.8 million extraordinary gain on the early
extinguishment of debt, net of tax, in the quarter ended November 1, 1997.  The
extraordinary gain was the result of repurchasing the senior secured
subordinated note issued to CVS in connection with the Acquisition at a discount
(see Note 7 of the Notes to the Condensed Consolidated Financial Statements).

Results of Operations for the Thirty-nine Weeks Ended November 1, 1997 Compared
to the Forty Weeks Ended November 2, 1996

     Wilsons opened 11 stores and closed 10 stores in the thirty-nine week
period ended November 1, 1997, compared to five store openings and 23 store
closings in the forty week period ended November 2, 1996.  As of November 1,
1997, Wilsons operated 462 stores compared to 476 stores at November 2, 1996.
The 14 fewer stores were a result of closing stores that did not achieve cash
flow targets established by management.

                                       13
<PAGE>
 
     Sales for the thirty-nine week period ended November 1, 1997 were $174.7
million compared with $194.6 million in the forty weeks ended November 2, 1996,
a decrease of $19.9 million, or 10.2%.  Approximately $6.3 million of the sales
decrease was due to one fewer week in the 1997 period compared to the 1996
period.  In addition, the Company operated on average 27, or 5.6%, fewer stores
in the thirty-nine weeks ended November 1, 1997 as the Company closed
underperforming stores.  Comparable store sales for the 1997 period declined
6.6%.  The comparable store sales decrease was primarily attributable to less
low-priced clearance merchandise in the spring as there were fewer liquidations
of closed stores compared to the prior year, along with unseasonably warm
temperatures from September through mid-October.

     Cost of goods sold, buying and occupancy costs for the thirty-nine week
period ended November 1, 1997 were $141.7 million, or 81.1% of sales, compared
to $153.0 million, or 78.6% of sales, for the forty week period of the previous
year.  Gross margin net of occupancy costs decreased 1.4 points as a percent of
sales for the thirty-nine week period as compared to the period one year ago due
primarily to additional markdowns required to liquidate clearance merchandise.
Occupancy costs for the 1997 period decreased $2.7 million due to operating
fewer stores; however, they increased as a percent of sales in 1997 as
comparable store sales declined while fixed rents associated with store leases
remained flat.  The Company's inventories are valued under the retail inventory
method using the last-in, first-out (LIFO) basis.  The difference in inventories
between LIFO and the first-in, first-out (FIFO) method was not material as of
November 1, 1997.  Interim period inventory determinations are partially based
on assumptions as to future inventory levels at the end of the fiscal year and
expected rates of inflation for the year which may impact future financial
results.

     Operating expenses for the thirty-nine week period ended November 1, 1997
were $70.4 million, or 40.3% of sales, compared to $68.5 million, or 35.2% of
sales, for the forty week period ended November 2, 1996.  Operating expenses in
the thirty-nine weeks ended     November 1, 1997 include an $8.5 million non-
cash compensation charge associated with the vesting of the remaining 881,982
shares of Restricted Stock (see "Overview").  Operating expenses excluding the
$8.5 million non-cash compensation charge decreased $6.6 million due partially
to the $2.3 million decrease in depreciation and amortization expense resulting
from the purchase accounting adjustment that reduced the amounts assigned to
property and equipment.  The remaining $4.3 million expense decrease is due to
reducing corporate expenses, controlling variable expenses in the stores,
operating on average 27 fewer locations and having one less week in the 1997
period.

     As a result of the above, Wilsons had a loss from operations of $37.4
million for the thirty-nine week period ended November 1, 1997, compared to a
loss from operations of $26.9 million for the forty week period ended November
2, 1996.

     Net interest expense for the thirty-nine week period ended November 1, 1997
was $4.4 million, or 2.5% of sales, compared to $4.8 million, or 2.5% of sales,
for forty week period ended November 2, 1996.  The decrease in net interest
expense is due to a decrease in the average amount of debt outstanding and an
increase in interest income offset by an increase in borrowing rates and the
amortization of deferred financing costs.

                                       14
<PAGE>
 
     Income tax benefit for the thirty-nine week period ended November 1, 1997
was $12.4 million, or 7.1% of sales, compared to an $11.6 million income tax
benefit, or 6.0% of sales, for the forty weeks ended November 2, 1996.  The
effective tax rate decreased in 1997 to a 29.6% tax rate from a 36.6% tax rate
in 1996 due primarily to the non-deductibility of the $8.5 million restricted
stock compensation expense.

The Company realized a $3.8 million extraordinary gain on the early
extinguishment of debt, net of tax, in the thirty-nine weeks ended November 1,
1997.  The extraordinary gain was the result of repurchasing the senior secured
subordinated note issued to CVS in connection with the Acquisition at a discount
(see Note 7 of the Notes to the Condensed Consolidated Financial Statements).

Liquidity and Capital Resources

     Wilsons' primary capital requirements are driven by the Company's strategy
to open new stores, remodel existing stores, update information systems and meet
seasonal working capital needs.  The Company's peak working capital needs
typically occur during the period from August through early December as
inventory levels are increased in advance of the Company's peak-selling season
from October through December.  Commencing in 1997, the Company currently 
plans to open 12 to 17 traditional stores and at least six airport stores 
annually for the next several years. Such stores are part of the Company's 
long-term strategy to identify new growth opportunities and increase profit 
margins.

     General Electric Capital Corporation and a syndicate of banks (the Banks)
have provided the Company with a three-year senior credit facility that expires
in May 1999 (the Senior Credit Facility).  The Senior Credit Facility provides
for borrowings of up to $150.0 million in aggregate principal amount, which
amount includes a letter of credit subfacility of up to $90.0 million.  The
maximum amount available under the Senior Credit Facility, however, is further
subject to a borrowing base limitation (less certain reserves) of 65% of
eligible inventory.  The Company's borrowing availability is also reduced by
outstanding letters of credit.  Interest is payable on borrowings at one or more
variable rates determined by reference to the "prime" rate plus .25% ("prime"
plus 0.0% for the first $10.0 million of borrowings) or LIBOR plus 1.75%.  The
spreads are subject to possible changes based upon the Company's financial
results.  As of November 1, 1997, the Company had $53.2 million of senior
indebtedness outstanding under its Senior Credit Facility (consisting of $20.1
million in borrowings and $33.1 million of outstanding letters of credit).  The
Company pays a monthly fee equal to .375% per annum on the unused amount of the
Senior Credit Facility and on that portion of the first $10.0 million in
borrowings that bears interest at prime plus a spread.  For letters of credit,
the Company pays a monthly fee in an amount equal to 1.25% per annum times the
daily average of the amount of letters of credit outstanding during each month,
which percentage is subject to possible changes based on the Company's financial
results.  The Senior Credit Facility contains certain covenants limiting, among
other things, the Company's ability to make capital expenditures, pay cash
dividends or make other distributions.  The Company plans to use the Senior
Credit Facility for its immediate and future working capital needs, including
capital expenditures.  From inception through February 1, 1997, the peak
borrowings and letters of credit outstanding under the Senior Credit Facility
were $48.2 million and $60.9 million, respectively, and the average amounts of

                                       15
<PAGE>
 
such borrowings and amounts covered by outstanding letters of credit for such
period were $15.8 million and $40.1 million, respectively. During 1995, the
highest amounts borrowed by the Company from CVS, net of the prior
indebtedness eliminated as part of the Acquisition, to fund working capital
expenditures and covered by outstanding letters of credit were $112.7 million
and $97.4 million, respectively, and the average amounts of such borrowings
and amounts covered by outstanding letters of credit for such year were $51.9
million and $58.9 million, respectively. The Company is highly dependent on
the Senior Credit Facility to fund working capital and letter of credit needs,
and management believes that the net proceeds from the Senior Credit Facility,
together with current and anticipated cash flow from operations and the
remaining net proceeds from the Company's initial public offering and the sale
of the Senior Notes (see Note 7 of the Notes to the Condensed Consolidated
Financial Statements), should be adequate to meet the Company's anticipated
working capital and capital expenditure requirements until the Senior Credit
Facility expires in 1999, when the Company expects to extend or replace such
facility. There can be no assurance, however, that the Senior Credit Facility
will be sufficient to fund such needs, or, if the Senior Credit Facility is
insufficient to meet such needs, that the Company will be able to obtain any
additional financing or obtain such financing on terms acceptable to the
Company.

     On August 18, 1997, the Company completed a private offering of $75.0
million of 11 1/4% senior notes (the Senior Notes) to certain institutional
buyers (the Offering).  Interest on the Senior Notes is payable semi-annually in
arrears on February 15 and August 15 of each year, commencing on February 15,
1998.  The Senior Notes mature on August 15, 2004, unless previously redeemed,
and the Company is not required to make any mandatory redemption or sinking fund
payment prior to maturity.  The Senior Notes are general unsecured obligations
of the Company and rank senior in right of payment to all existing and future
subordinated indebtedness of the Company and rank on equal terms in right of
payment with all other current and future unsubordinated indebtedness of the
Company.  The Indenture governing the Senior Notes contains numerous operating
covenants that limit the discretion of management with respect to certain
business matters, and which place significant restrictions on, among other
things, the ability of the Company to incur additional indebtedness, to create
liens or other encumbrances, to declare or pay any dividend, to make certain
payments or investments, loans and guarantees and to sell or otherwise dispose
of assets and merge or consolidate with another entity.  The Company used
approximately $56.5 million of the approximately $72.1 million net proceeds from
the Offering to repurchase the outstanding senior secured subordinated note
payable to CVS in connection with the Acquisition (the CVS Note) and pay the
accrued interest thereon. The balance of the net proceeds has been and will be
used for general corporate purposes, including capital expenditures and
additional store openings. Such proceeds will reduce the total amount of
borrowings and shorten the length of time the Company will borrow under the
Senior Credit Facility.

Cash Flow Analysis

     Operating activities for the thirty-nine week period ended November 1, 1997
resulted in cash used of $118.7 million compared to cash used of $101.1 million
in the forty week period ended November 2, 1996.  The $118.7 million cash used
in operating activities in the thirty-nine week period ended November 1, 1997
was primarily a result of the $25.7 million net loss, the 

                                       16
<PAGE>
 
$75.2 million seasonal increase in inventories, and the $22.5 million decrease
in income taxes payable and other liabilities resulting primarily from the
$12.4 million tax benefit generated by the year-to-date net loss and the $8.2
million tax payments made in 1997.

     Fluctuations in certain balance sheet accounts between February 1, 1997 and
November 1, 1997 reflect normal seasonal variations within the retail industry.
The level of cash and cash equivalents, inventories and accounts receivable
fluctuate due to the seasonal nature of the retail business.  Along with the
fluctuations in these current assets, there is also a corresponding fluctuation
in trade accounts payable, notes payable and certain accrued expenses.

     Investing activity for the thirty-nine weeks ended November 1, 1997 was
comprised of capital expenditures totaling $6.0 million.  The capital
expenditures were primarily for the implementation of certain new information
systems, the renovation of and improvements to existing stores and constructing
new stores.  Capital expenditures for the forty week period ended November 2,
1996 totaled $6.7 million.  Commencing in 1997, the Company currently plans to
open 12 to 17 traditional mall-based stores and at least six airport stores 
annually for the next several years. The cost to open a traditional mall-based
store is currently estimated to range from $130,000 to $200,000. The cost to 
open an airport store is currently estimated to range from $125,000 to 
$175,000. Capital expenditures for the year ending January 31, 1998 are 
anticipated to be approximately $13.0 million.

     Cash provided by financing activities for the thirty-nine weeks ended
November 1, 1997 was $48.6 million. The $48.6 million provided by financing
activities in 1997 was the result of $9.5 million in net proceeds from the
Company's initial public offering, $17.1 million in net proceeds from the
issuance of long-term debt after repayment of the CVS note, $20.1 million in
seasonal borrowings under the Senior Credit facility and a $1.9 million
increase in book overdrafts which occur as outstanding checks exceed funds on
deposit in noninvestment accounts. The proceeds from the initial public
offering and the Offering enabled the Company to reduce seasonal borrowings
under the Senior Credit Facility. Financing activities in the 1996 period
included the elimination of all prior indebtedness owed by the Predecessor
Companies to CVS and the sale of $12.0 million of common and preferred stock.
In addition, on May 27, 1997, the holders of the 7,405 shares of preferred
stock exchanged their entire holdings of such shares for common stock in a non-
cash transaction (see Note 6 of the Notes to the Condensed Consolidated
Financial Statements).

     Management believes that the Company's financial resources, including the
Senior Credit Facility, the remaining net proceeds from the Senior Notes, the
remaining net proceeds from the Company's initial public offering and current
and anticipated cash flow from operations, will be adequate to fund the
Company's operations for the foreseeable future.

     Except for historical information, matters discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are
forward-looking statements that involve risks and uncertainties, and actual
results may be materially different.  Because actual results may differ, readers
are cautioned not to place undue reliance on forward-looking statements.
Factors that could cause actual results to differ include: declines in
comparable store sales; future losses; changes in consumer preferences and
fashion trends away from leather; economic downturns; heavy dependence on the
holiday selling season; high levels of Company debt and restrictions imposed by
lenders; limited operating history as a stand-alone Company; risks associated
with foreign contract manufacturing and importing; increased competition in the

                                       17
<PAGE>
 
retail leather apparel and accessories industry; risks associated with future
growth; decreased availability and increased cost of raw materials; loss of key
personnel; and volatile stock price and market.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     Not Applicable.

                                       18
<PAGE>
 
PART II - OTHER INFORMATION

Item 2.    Changes in Securities and Use of Proceeds

           D.  Use of Proceeds

               From the effective date of the Company's initial public
               offering on May 27, 1997 to November 2, 1997, the Company used
               the $9.5 million of net proceeds to fund actual capital
               expenditures, including building new stores ($1.2 million),
               remodeling existing stores ($1.7 million), developing and
               implementing new information systems ($1.0 million), other
               capital purchases ($0.5 million), and to reduce short-term
               borrowings ($5.1 million).

               No direct or indirect payments of the proceeds received from
               the initial public offering were made to directors, officers,
               stockholders or affiliates of the Company.

               See "Management's Discussion and Analysis of Financial
               Condition and Results of Operations -- Liquidity and Capital
               Resources" in Part I., Item 2., of the document for a
               description of limitations upon the payment of dividends.

Item 6.    Exhibits and Reports on Form 8-K

           A.  Exhibits

               Exhibit          Description
               -------          -----------
                 4.1            Underwriter Warrants (1)

                 4.2            Redeemable Warrant Agreement, including form of
                                Redeemable Warrant Certificate (2)

                 4.3            Amendment to the Shareholder Agreement among
                                Leather Investors Limited Partnership I,
                                Leather Investors Limited Partnership II, the
                                Other Investors Named on the Signature Pages
                                thereto and Wilsons The Leather Experts Inc.(3)

                11.1            Computation of per share loss
                27.1            Financial Data Schedule  

           B. Reports on Form 8-K:

                1. Form 8-K filed on August 4, 1997 in connection with a press
                   release announcing the proposed private offering of Senior
                   Notes.

                                       19
<PAGE>
 
                2. Form 8-K filed on August 19, 1997 in connection with a
                   press release announcing the completion of the private
                   offering of Senior Notes.


________________

(1) Incorporated by reference to Exhibit 4.4 to the Company's Registration
    Statement on Form S-4 (333-37055) filed with the Securities and Exchange
    Commission (Commission) on October 2, 1997.

(2) Incorporated by reference to Exhibit 4.10 to the Company's Registration
    Statement on Form S-4 (333-37055) filed with the Commission on October 2,
    1997.

(3) Incorporated by reference to Exhibit 4.11 to the Company's Registration
    Statement on Form S-4 (333-37055) filed with the Commission on October 2,
    1997. 

                                       20
<PAGE>
 
                                  SIGNATURE


Pursuant to the requirements 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.



WILSONS THE LEATHER EXPERTS INC.


By: /s/ Douglas J. Treff
    ------------------------------
     Douglas J. Treff
     Vice President, Finance,
     Chief Financial Officer, and
     Assistant Secretary


Date: December 12, 1997  
     -----------------------------

                                       21
<PAGE>
 
                              INDEX TO EXHIBITS

Exhibit
  No.                    Description                       Method of Filing 
-------                  -----------                       ----------------

  4.1   Underwriter Warrants (1)                       Incorporated by Reference

  4.2   Redeemable Warrant Agreement, including form   Incorporated by Reference
        of Redeemable Warrant Certificate (2)       

  4.3   Amendment to the Shareholder Agreement among   Incorporated by Reference
        Leather Investors Limited Partnership I, 
        Leather Investors Limited Partnership II, the 
        Other Investors Named on the Signature Pages 
        thereto and Wilsons The Leather Experts 
        Inc. (3)

 11.1   Computation of per share loss                  Electronic Transmission

 27.1   Financial Data Schedule                        Electronic Transmission  
________________

(1)  Incorporated by reference to Exhibit 4.4 to the Company's Registration
     Statement on Form S-4 (333-37055) filed with the Securities and Exchange
     Commission (Commission) on October 2, 1997.

(2)  Incorporated by reference to Exhibit 4.10 to the Company's Registration
     Statement on Form S-4 (333-37055) filed with the Commission on October 2,
     1997.

(3)  Incorporated by reference to Exhibit 4.11 to the Company's Registration
     Statement on Form S-4 (333-37055) filed with the Commission on October 2,
     1997.