<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 August 2, 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
September 11, 1997 was 9,532,083 shares.


<PAGE>
 
                        WILSONS THE LEATHER EXPERTS INC.
                                     INDEX
                                        

PART I - FINANCIAL INFORMATION                                              PAGE

     Item 1.  Consolidated Financial Statements

              Consolidated Balance Sheets -
                 August 2, 1997 and February 1, 1997                           3

              Consolidated Statements of Operations -
                 Thirteen weeks ended August 2, 1997,
                 fourteen weeks ended August 3, 1996,
                 four weeks ended May 25, 1996,
                 ten weeks ended August 3, 1996,
                 twenty-six weeks ended August 2, 1997,
                 twenty-seven weeks ended August 3, 1996,
                 seventeen weeks ended May 25, 1996 and
                 ten weeks ended August 3, 1996                                4
 
              Consolidated Statements of Cash Flows -
                 Twenty-six weeks ended August 2, 1997,
                 seventeen weeks ended May 25, 1996 and
                 ten weeks ended August 3, 1996                                6
 
              Notes to 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      17
 
PART II - OTHER INFORMATION
 
     Item 2.  Changes in Securities and Use of Proceeds                       18
 
     Item 6.  Exhibits and Reports on Form 8-K                                19
 
     Signature                                                                21
 
     Index to Exhibits                                                        22

                                       2
<PAGE>
<TABLE> 
<CAPTION> 
               Wilsons The Leather Experts Inc. and Subsidiaries
                          Consolidated Balance Sheets
              (In Thousands, Except Share and Per Share Amounts)


                                                                                         August 2      February 1
                               Assets                                                      1997           1997
                               ------                                                  -----------     ----------
                                                                                       (Unaudited)
<S>                                                                                    <C>             <C>
Current Assets:
  Cash and cash equivalents                                                            $   24,091      $  81,553
  Accounts receivable, net                                                                  7,491          4,851
  Inventories                                                                              87,177         64,919
  Prepaid expenses                                                                            819          1,246
                                                                                       ----------      ----------
      Total current assets                                                                119,578        152,569

Property and equipment, net                                                                18,711         17,091
Other assets, net                                                                           1,222          1,555
Deferred income taxes                                                                         530          1,173
                                                                                       ----------      ---------

                                                                                       $  140,041      $ 172,388
                                                                                       ==========      =========


                             Liabilities and Shareholders' Equity
                             ------------------------------------
Current Liabilities:
  Accounts payable                                                                     $   12,735      $  10,666
  Accrued expenses                                                                         26,083         34,517
  Income taxes payable                                                                        175         20,345
  Deferred income taxes                                                                     4,288          3,243
                                                                                       ----------      ---------
      Total current liabilities                                                            43,281         68,771

Long-term debt                                                                             61,311         55,811
Other long-term liabilities                                                                 1,996          4,341
                                                                                       ----------      ---------



Shareholders' Equity:
  Preferred stock, $.01 par value; 10,000,000
   shares authorized, 0 and 7,405 shares, $1,000 stated
   value issued and outstanding on August 2, 1997                                               -          7,405
   and February 1, 1997, respectively
  Common stock, $.01 par value; 45,000,000
   shares authorized, 9,532,083 and 7,650,000 shares
   issued and outstanding on August 2, 1997 and
   February 1, 1997, respectively                                                              95             77
  Additional paid-in capital                                                               29,339         12,501
  Retained earnings                                                                         4,062         23,511
  Cumulative translation adjustment                                                           (43)           (29)
                                                                                       ----------      ---------
      Total shareholders' equity                                                           33,453         43,465
                                                                                       ----------      ---------
                                                                                       $  140,041      $ 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 Weeks        Fourteen Weeks        Four Weeks        Ten Weeks
                                                             Ended                   Ended              Ended             Ended
                                                         August 2, 1997        August 3, 1996       May 25, 1996     August 3, 1996
                                                         -------------         --------------       ------------     --------------
                                                           (Company)             (Combined          (Predecessor        (Company)
                                                                                 Companies)           Companies)
<S>                                                      <C>                   <C>                   <C>             <C> 
Net sales                                                $    36,471           $    41,442           $    12,924     $    28,518 

Costs and expenses:                                      
  Cost of goods sold, buying and occupancy costs              36,957                38,236                12,037          26,199   
  Selling, general and administrative expenses                17,293                20,353                 6,521          13,832
  Depreciation and amortization                                  505                   903                   901               2
  Restricted stock compensation expense                          450                     -                     -               -
                                                         -----------           -----------           -----------     -----------
          Loss from operations                               (18,734)              (18,050)               (6,535)        (11,515)

Interest expense, net                                          1,248                 1,251                   103           1,148
                                                         -----------           -----------           -----------     -----------
          Loss before income taxes                           (19,982)              (19,301)               (6,638)        (12,663)

Income tax benefit                                            (7,401)               (7,391)               (2,835)         (4,556)
                                                         -----------           -----------           -----------     -----------
          Net loss                                       $   (12,581)          $   (11,910)          $    (3,803)    $    (8,107)
                                                         ===========           ===========           ===========     ===========

Net loss per common share                                $     (1.22)
                                                         ===========
Weighted average common shares outstanding                    10,299
                                                         ===========
Pro forma net loss per common share                       $    (1.20)
                                                         ===========
Pro forma weighted average common
  shares outstanding                                          10,455
                                                         ===========
</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>

                                                           Twenty-six        Twenty-seven          Seventeen             Ten
                                                             Weeks               Weeks               Weeks              Weeks
                                                             Ended               Ended               Ended              Ended
                                                         August 2, 1997      August 3, 1996       May 25, 1996      August 3, 1996
                                                         --------------      --------------       ------------      --------------
                                                            (Company)          (Combined          (Predecessor        (Company)
                                                                               Companies)         Companies)
<S>                                                        <C>                  <C>                 <C>               <C>
Net sales                                                  $ 93,422             $108,213            $ 79,695          $ 28,518

Cost and expenses:
  Cost of goods sold, buying and occupancy costs             84,222               90,936              64,737            26,199
  Selling, general and administrative expenses               36,491               41,280              27,448            13,832
  Depreciation and amortization                                 942                3,816               3,814                 2
  Restricted stock compensation expense                         900                    -                   -                 -
                                                           --------             --------            --------          --------

           Loss from operations                             (29,133)             (27,819)            (16,304)          (11,515)

Interest expense, net                                         1,919                2,398               1,250             1,148
                                                           --------             --------            --------          --------

           Loss before income taxes                         (31,052)             (30,217)            (17,554)          (12,663)

Income tax benefit                                          (11,208)             (11,117)             (6,561)           (4,556)
                                                           --------             --------            --------          --------

           Net loss                                        $(19,844)            $(19,100)           $(10,993)         $ (8,107)
                                                           ========             ========            ========          ========

Net loss per common share                                  $  (2.06)
                                                           ========

Weighted average common shares outstanding                    9,650
                                                           ========

Pro forma net loss per common share                        $  (2.06)
                                                           ========

Pro forma weighted average common shares outstanding          9,619
                                                           ========
</TABLE>

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

                                       5
<PAGE>
 
               Wilsons The Leather Experts Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows
                                (In Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                             Twenty-six       Seventeen          Ten
                                                                                Weeks           Weeks           Weeks
                                                                                Ended           Ended           Ended
                                                                           August 2, 1997   May 25, 1996   August 3, 1996
                                                                           --------------   ------------   --------------
                                                                              (Company)     (Predecessor      (Company)
                                                                                             Companies)
<S>                                                                        <C>              <C>            <C>
OPERATING ACTIVITIES:
 Net loss                                                                    $ (19,844)      $ (10,993)      $  (8,107)

 Adjustments to reconcile net loss to net cash used in operating activities-
  Restructuring charges paid                                                         -          (5,957)              -
  Depreciation and amortization                                                    942           3,814               2
  Amortization of deferred financing costs                                         333               -             111
  Loss on disposal of assets                                                         -             184               -
  Restricted stock compensation expense                                            900               -               -
  Deferred income taxes                                                          1,688           5,115          (4,939)
  Changes in operating assets and liabilities, net of assets and
    liabilities acquired:
      Accounts receivable, net                                                  (2,640)           (222)         (2,709)
      Inventories                                                              (22,258)         14,410         (24,526)
      Prepaid expenses                                                             612             114          (4,494)
      Other noncurrent assets                                                        -               4               -
      Accounts payable and accrued expenses                                     (4,197)         (9,689)          2,625
      Income taxes payable and other liabilities                               (17,015)        (11,965)          1,180
                                                                             ---------       ---------       ---------
          Net cash used in operating activities                                (61,479)        (15,185)        (40,857)
                                                                             ---------       ---------       ---------
INVESTING ACTIVITIES:
 Additions to property, equipment and other noncurrent assets                   (2,562)         (3,430)           (823)
 Acquisitions, net of cash acquired                                                  -               -          37,072
                                                                             ---------       ---------       ---------
          Net cash provided by (used in) investing activities                   (2,562)         (3,430)         36,249
                                                                             ---------       ---------       ---------
FINANCING ACTIVITIES:
 Change in due to/from CVS                                                           -        (105,013)              -
 Capital contributed by CVS                                                          -         124,000               -
 Change in book overdrafts                                                      (2,873)         (4,360)          2,051
 Proceeds from sale of common and preferred stock                                9,452               -          12,000
                                                                             ---------       ---------       ---------
          Net cash provided by financing activities                              6,579          14,627          14,051
                                                                             ---------       ---------       ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           (57,462)         (3,988)          9,443

CASH AND CASH EQUIVALENTS, beginning of period                                  81,553           7,270               -
                                                                             ---------       ---------       ---------
CASH AND CASH EQUIVALENTS, end of period                                     $  24,091       $   3,282       $   9,443
                                                                             =========       =========       =========

SUPPLEMENTAL CASH FLOW INFORMATION:
 Cash paid during the period for-
   Interest                                                                  $     388       $   1,580       $     210
                                                                             =========       =========       =========
   Income taxes                                                              $   7,420       $     204       $       -
                                                                             =========       =========       =========
 Noncash investing and financing activities-
   Liabilities assumed for acquisition of business                           $       -       $       -       $  46,927
                                                                             =========       =========       =========
   Issuance of long-term debt                                                $       -       $       -       $  55,811
                                                                             =========       =========       =========
   Accrued preferred stock dividends                                         $    (395)      $       -       $       -
                                                                             =========       =========       =========
</TABLE>

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

                                       6

<PAGE>
 
               Wilsons The Leather Experts Inc. and Subsidiaries
                   Notes to 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.

     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 on a preliminary basis 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 of the Predecessor Companies include those of
Wilsons Center, Inc., a former subsidiary of CVS, and its wholly owned
subsidiary Rosedale Wilsons, Inc. and all of its retail subsidiaries.  All
intercompany balances and transactions have been eliminated.

     The financial statements for the fourteen and twenty-seven weeks ended
August 3, 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
have been if the Company had operated as a stand-alone company.

                                       7
<PAGE>
 
     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-1 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 August 2, 1997.  The Predecessor
Companies determined cost using the retail inventory method on the FIFO basis.

4.   Net Loss Per Common Share and Pro Forma Net Loss Per Common Share

     Net loss per common share and pro forma net loss per common share have 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.  Pro forma net loss per
common share includes the effect of the exchange of Series A Preferred for
common stock (see Note 6).

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 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 

                                       8
<PAGE>
 
purchase one share of common stock for $13.50 per share. The Company received
net proceeds of approximately $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

     On August 18, 1997, the Company completed a private offering of $75.0
million of 11 1/4% 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 Company used approximately $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. The balance of the net
proceeds, $15.6 million, will be used for general corporate purposes, including
capital expenditures and additional store openings.

                                       9
<PAGE>
 
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-1
Registration Statement.

     The financial statements for the fourteen and twenty-seven weeks ended
August 3, 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 owned by management and an investor group, acquired
such common stock.

     Prior to the Acquisition, the Predecessor Companies were operated as part
of CVS.  Certain of the historical financial statements presented herein are for
the seventeen weeks and four weeks ended May 25, 1996, during which the
Predecessor Companies did not operate as an independent company.  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 August 2, 1997, 198,018 shares of such Restricted Stock had
vested and for the period ended February 1, 1997, 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 with the repayment
of the senior secured subordinated note issued to CVS in connection with the
acquisition.  The Company will

                                       11
<PAGE>
 
be required to record an additional 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.

     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
period from October through December, which includes the Christmas selling
season.  Wilsons recorded 55.6% of its sales for the fiscal year ended February
1, 1997 in the peak selling period.  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 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 Thirteen Weeks Ended August 2, 1997 Compared to
the Fourteen Weeks Ended August 3, 1996

     Wilsons opened one store in the thirteen-week period ended August 2, 1997
compared to one store opening and six store closings in the fourteen-week period
ended August 3, 1996. As of August 2, 1997, Wilsons operated 452 stores compared
to 477 stores at August 3, 1996.  The 25 fewer stores were a result of closing
stores that did not achieve cash flow targets established by management.

     Sales for the thirteen-week period ended August 2, 1997 were $36.5 million
compared with $41.4 million for the fourteen weeks ended August 3, 1996, a
decrease of $4.9 million, or 11.8%.  Approximately $2.9 million of the sales
decrease was due to one less week in the current quarter compared to one year
ago. In addition, the Company operated on average 28, or 5.8%, fewer stores in
the thirteen weeks ended August 2, 1997 as the Company closed underperforming
stores.  Comparable store sales for the quarter declined 3.4%.  The comparable
store sales decrease was primarily attributable to less low-priced clearance
merchandise associated with fewer closed stores in the immediately preceding
quarters compared to the period one year earlier.  In addition, response to the
Company's special order promotion fell short of prior year results.

     Cost of goods sold, buying and occupancy costs for the thirteen-week period
ended August 2, 1997 were $37.0 million, or 101.3% of sales, compared to $38.2
million, or 92.3% of sales, for the fourteen-week period of the previous year.
Gross margin net of occupancy costs decreased 5.7 points as a percent of sales
for the thirteen-week period as compared to the period one year ago due to
additional markdowns required to liquidate clearance merchandise in advance of
the fall season. Occupancy costs for the 1997 period

                                       12
<PAGE>
 
decreased $0.8 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 August 2, 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 thirteen-week period ended August 2, 1997 were
$18.2 million, or 50.0% of sales, compared to $21.3 million, or 51.3% of sales,
for the fourteen-week period ended August 3, 1996.  The expense decrease of $3.0
million was due to reductions in corporate expenses, continued control of
variable expenses in the stores, operating on average 28 fewer locations, and
having one less week in the 1997 period.  Offsetting the operating expense
reductions was a $0.5 million accrued expense associated with the vesting of
restricted stock.

     As a result of the above, Wilsons had a loss from operations of $18.7
million for the thirteen-week period ended August 2, 1997, compared to a loss
from operations of $18.1 million for the fourteen-week period ended August 3,
1996.

     Net interest expense for the thirteen-week period ended August 2, 1997 was
$1.2 million, or 3.4% of sales, compared to $1.3 million, or 3.0% of sales, for
the fourteen-week period ended August 3, 1996.

     Income tax benefit for the thirteen-week period ended August 2, 1997 was
$7.4 million, or 20.3% of sales, compared to a $7.4 million income tax benefit,
or 17.8% of sales, for the fourteen weeks ended August 3, 1996.  The effective
tax rate decreased in 1997 to a 37.0% tax rate from a 38.3% tax rate in 1996 due
primarily to the impact of state income taxes.

Results of Operations for the Twenty-six Weeks Ended August 2, 1997 Compared to
the Twenty-seven Weeks Ended August 3, 1996

     Wilsons opened one store and closed 10 stores in the twenty-six week
period ended August 2, 1997, compared to four store openings and 21 store
closings in the twenty-seven week period ended August 3, 1996.  As of August 2,
1997, Wilsons operated 452 stores compared to 477 stores at August 3, 1996.  The
25 fewer stores were a result of closing stores that did not achieve cash flow
targets established by management.

     Sales for the twenty-six week period ended August 2, 1997 were $93.4
million compared with $108.2 million in the twenty-seven weeks ended August 3,
1996, a decrease of $14.8 million, or 13.7%.  Approximately $6.3 million of the
sales decrease was due to one less week in the 1997 period compared to the 1996
period.  In addition, the Company operated on average 29, or 6.0%, fewer stores
in the twenty-six weeks ended August 2, 1997 as the Company closed
underperforming stores.  Comparable store sales for the 1997 period declined
5.8%.  The comparable store sales decrease was primarily attributable to less
low-priced clearance 

                                       13
<PAGE>
 
merchandise associated with fewer closed stores in the immediately preceding
quarter compared to the period one year earlier.

     Cost of goods sold, buying and occupancy costs for the twenty-six week
period ended August 2, 1997 were $84.2 million, or 90.2% of sales, compared to
$90.9 million, or 84.0% of sales, for the twenty-seven week period of the
previous year. Gross margin net of occupancy costs decreased 3.4 points as a
percent of sales for the twenty-six week period as compared to the period one
year ago due to additional markdowns required to liquidate clearance
merchandise. Occupancy costs for the 1997 period decreased $2.0 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
August 2, 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 twenty-six week period ended August 2, 1997 were
$38.3 million, or 41.0% of sales, compared to $45.1 million, or 41.7% of sales,
for the twenty-seven week period ended August 3, 1996.  The expense decrease of
$6.8 million was partially due to the $2.9 million decrease in depreciation and
amortization expense resulting from the purchase accounting adjustment that
reduced the amounts assigned to property and equipment.  The remaining expense
decrease is due to reductions in corporate expenses, continued control of
variable expenses in the stores, operating on average 29 fewer locations, and
having one less week in the 1997 period.  Offsetting the operating expense
reductions was a $0.9 million accrued expense associated with the vesting of
restricted stock.

     As a result of the above, Wilsons had a loss from operations of $29.1
million for the twenty-six week period ended August 2, 1997, compared to a loss
from operations of $27.8 million for the twenty-seven week period ended August
3, 1996.

     Net interest expense for the twenty-six week period ended August 2, 1997
was $1.9 million, or 2.1% of sales, compared to $2.4 million, or 2.2% of sales,
for twenty-seven week period ended August 3, 1996.  The decrease in net interest
expense is primarily 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.

     Income tax benefit for the twenty-six week period ended August 2, 1997 was
$11.2 million, or 12.0% of sales, compared to an $11.1 million income tax
benefit, or 10.3% of sales, for the twenty-seven weeks ended August 3, 1996.
The effective tax rate decreased in 1997 to a 36.1% tax rate from a 36.8% tax
rate in 1996 due primarily to the impact of state income taxes.

                                       14
<PAGE>
 
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 have provided
the Company with a three-year senior credit facility (Senior Credit Facility)
that expires in May 1999. 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 August 2,
1997, the Company had no consolidated borrowings outstanding under its Senior
Credit Facility. 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 and each Guarantor'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. As
of August 2, 1997, there was $43.9 million in outstanding letters of credit
under the Senior Credit Facility. 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 such borrowings and amounts covered by outstanding letters of credit
for such periods were $15.8 million and $40.1 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 Senior Credit Facility,
together with current and anticipated cash flow from operations, the net
proceeds from its initial public offering and the remaining net proceeds from
the sale of the Senior Notes, (discussed below) 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.

                                       15
<PAGE>
 
     As of August 2, 1997, the Company also had outstanding the note payable to
CVS, which was a senior secured subordinated note for $61.3 million. $60.5
million of the principal amount of the note bore interest at the rate of 10% per
annum, compounded annually, with all such principal and interest due and payable
on December 31, 2000. As of August 2, 1997, $1.2 million in interest had accrued
on the note. The remaining principal balance of the note ($0.8 million) did not
bear interest. On August 18, 1997 the Company repurchased the senior secured
subordinated note with a portion of the proceeds of the private offering
discussed below.

     On August 18, 1997, the Company completed a private offering of $75.0
million of 11 1/4% senior notes due 2004 (the Senior Notes) to certain
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 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. The balance of the net proceeds 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 twenty-six week period ended August 2, 1997
resulted in cash used of $61.5 million compared to cash used of $56.0 million in
the twenty-seven week period ended August 3, 1996. The $61.5 million cash used
in operating activities in the twenty-six week period ended August 2, 1997 was
primarily a result of the $19.8 million net loss, the $22.3 million seasonal
increase in inventories, and the $17.0 million decrease in income taxes payable
and other liabilities resulting from the $11.2 million tax benefit generated by
the year-to-date net loss and the $7.4 million tax payments made in the first
half of 1997.

     Fluctuation in certain balance sheet accounts between February 1, 1997 and
August 2, 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 and certain accrued expenses.
                        

                                      16
<PAGE>
 
     Investing activity for twenty-six weeks ended August 2, 1997 was
comprised of capital expenditures totaling $2.6 million. The capital
expenditures were primarily for the implementation of certain new information
systems and the renovation of and improvements to existing stores. Capital
expenditures for the twenty-seven week period ended August 3, 1996 totaled $4.3
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 twenty-six weeks ended August
2, 1997 was $6.6 million. The $6.6 million provided by financing activities in
1997 was the result of $9.5 million in net proceeds from the Company's initial
public offering offset by a $2.9 million decrease in book overdrafts which occur
as outstanding checks exceed funds on deposit in noninvestment accounts. The
proceeds from the offering enable the Company to reduce seasonal borrowings
under the Revolving 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 noncash
transaction (see Note 6 of the Notes to the Consolidated Financial Statements).

     Management believes that the Company's financial resources, including the
Senior Credit Facility, the balance of the net proceeds from the Senior Notes,
the net proceeds from its 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
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.

                    
                                      17
<PAGE>
 
PART II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

         B.  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.


         D.  Use of Proceeds

             On May 27, 1997, the Securities and Exchange Commission declared
             effective the Company's Registration Statement on Form S-1
             (Commission file number 333-13967) relating to the initial public
             offering of 1,100,000 units. On June 2, 1997, the Company completed
             the offering of 1,100,000 units at $9.00 per unit, or an aggregate
             amount of $9,900,000. Each unit consisted of one share of a single
             class of common stock and one redeemable warrant to purchase one
             share of common stock for $13.50 per share. The redeemable warrants
             are subject to redemption by the Company for $.01 per warrant any
             time 90 or more days after May 27, 1997, on 30 days written notice,
             provided that the closing bid price of the Company's common stock
             exceeds $14.50 per share (subject to adjustment) for any ten
             consecutive trading days prior to such notice. In addition, on June
             27, 1997 the managing underwriter, Equity Securities Investments,
             Inc. exercised its entire over-allotment option to purchase 165,000
             units at $9.00 per unit, or an aggregate amount of $1,485,000. The
             Company's net proceeds from the offering totaled $9.5 million.

             The Company incurred the following actual expenses in connection
             with the issuance and distribution of the 1,265,00 units as
             discussed above:

             <TABLE>
             <CAPTION>
             (in thousands)
             --------------
             <S>                         <C>  
             Underwriter's discount          $  854
             Underwriter's expenses             171
             Other expenses                     909
                                             ------
                 Total expenses              $1,934
             </TABLE>

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

             From May 27, 1997 to August 2, 1997 the Company used the net
             proceeds to fund capital expenditures (in thousands), including
             building new stores ($111),


                                       18

<PAGE>
 
               remodeling existing stores ($457), developing and
               implementing new information systems ($187), other capital
               purchases ($135), and for short-term investments (in thousands)
               ($8,561).

               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 limitation
               upon the payment of dividends.

Item 6.   Exhibits and Reports on Form 8-K

          A.   Exhibits

               Exhibit    Description
               -------    -----------
               10.1       Amendment No. 4 to Credit Agreement

               10.2       Repurchase Agreement dated as of August 13, 1997, by
                          and between Wilsons The Leather Experts Inc. and CVS
                          New York, Inc.

               10.3       Indenture dated as of August 18, 1997, by and among
                          Wilsons The Leather Experts Inc., the other
                          corporations listed on the signature pages thereof,
                          and Norwest Bank Minnesota, National Association

               10.4       Purchase Agreement dated as of August 14, 1997, by and
                          among Wilsons The Leather Experts Inc., the Subsidiary
                          Guarantors party thereto, and BancAmerica Securities,
                          Inc.

               10.5       Registration Rights Agreement dated as of August 18,
                          1997 by and among Wilsons The Leather Experts Inc.,
                          the Subsidiary Guarantors party thereto, and
                          BancAmerica Securities, Inc.

               10.6       Amendment No. 2 to Pledge Agreement dated as of July
                          31, 1997, between River Hills Wilsons, Inc. and
                          General Electric Capital Corporation

               10.7       Joinder Agreement dated as of July 31, 1997, by and
                          between Wilsons International Inc. and General
                          Electric Capital Corporation

               10.8       Parent Guaranty dated as of May 25, 1996, by Wilsons
                          The Leather Experts Inc., Wilsons Center, Inc.,
                          Rosedale Wilsons, Inc. and River Hills Wilsons, Inc.
                          in favor of General Electric Capital Corporation

                                       19
<PAGE>
 
               10.9       Reaffirmation of Guaranty dated as of July 31, 1997,
                          by Wilsons The Leather Experts Inc., Wilsons Center,
                          Inc., Rosedale Wilsons, Inc. and River Hills Wilsons,
                          Inc., in favor of General Electric Capital Corporation

               10.10      Store Guarantors' Guaranty dated as of May 25, 1996,
                          by Bermans The Leather Experts, Inc., Wilsons House of
                          Suede, Inc., Wilsons Tannery West, Inc., the
                          Georgetown Subsidiaries that are signatories thereto
                          and the Individual Store Subsidiaries that are
                          signatories thereto, in favor of General Electric
                          Capital Corporation

               11.1       Computation of per share loss

               27.1       Financial Data Schedule

          B.   Reports on Form 8-K: The Company did not file any reports on Form
               8-K during the quarter ended August 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:  September 11, 1997
     ---------------------------------------

                                       21
<PAGE>
 
                               INDEX TO EXHIBITS
                                        
<TABLE>
<CAPTION>
Exhibit        Description                                          Method of Filing
-------        -----------                                          ----------------
<C>            <S>                                                  <C>

10.1           Amendment No. 4 to Credit Agreement                  Electronic Transmission
10.2           Repurchase Agreement dated as of August 13, 1997,    Electronic Transmission
               by and between Wilsons The Leather Experts Inc.
               and CVS New York, Inc.
10.3           Indenture dated as of August 18, 1997, by and        Electronic Transmission
               among Wilsons The Leather Experts Inc., the other
               corporations listed on the signature pages
               thereof, and Norwest Bank Minnesota, National
               Association
10.4           Purchase Agreement dated as of August 14, 1997, by   Electronic Transmission
               and among Wilsons The Leather Experts Inc., the
               Subsidiary Guarantors party thereto, and
               BancAmerica Securities, Inc.
10.5           Registration Rights Agreement dated as of August     Electronic Transmission
               18, 1997 by and among Wilsons The Leather Experts
               Inc., the Subsidiary Guarantors party thereto, and
               BancAmerica Securities, Inc.
10.6           Amendment No. 2 to Pledge Agreement dated as of      Electronic Transmission
               July 31, 1997, between River Hills Wilsons, Inc.
               and General Electric Capital Corporation
10.7           Joinder Agreement dated as of July 31, 1997, by      Electronic Transmission
               and between Wilsons International Inc. and General
               Electric Capital Corporation
10.8           Parent Guaranty dated as of May 25, 1996, by         Electronic Transmission
               Wilsons The Leather Experts Inc., Wilsons Center,
               Inc., Rosedale Wilsons, Inc. and River Hills
               Wilsons, Inc. in favor of General Electric Capital
               Corporation
10.9           Reaffirmation of Guaranty dated as of July 31,       Electronic Transmission
               1997, by Wilsons The Leather Experts Inc., Wilsons
               Center, Inc., Rosedale Wilsons, Inc., River Hills
               Wilsons, Inc. in favor of General Electric Capital
               Corporation
</TABLE>
<PAGE>
 
<TABLE>
<C>            <S>                                                  <C>
10.10          Store Guarantors' Guaranty dated as of May 25,       Electronic Transmission
               1996, by Bermans The Leather Experts, Inc.,
               Wilsons House of Suede, Inc., Wilsons Tannery
               West, Inc., the Georgetown Subsidiaries that are
               signatories thereto and the Individual Store
               Subsidiaries that are signatories thereto, in
               favor of General Electric Capital Corporation

11.1           Computation of per share loss                        Electronic Transmission

27.1           Financial Data Schedule                              Electronic Transmission
</TABLE>