News Release

J. Crew Reports Strong Operating Income Improvement In Second Quarter

September 13, 2005 at 12:00 AM EDT

James Scully
Chief Financial Officer
(212) 209-8040

Owen Blicksilver
Owen Blicksilver PR
(516) 742-5950


NEW YORK (September 13, 2005) - J. Crew Group, Inc. announced today that its operating income for the thirteen weeks ended July 30, 2005 increased by 150% to $20 million, compared to $8 million in the comparable period last year. This increase was driven primarily by a 22% increase in revenues and higher gross margins.

Millard Drexler, Chairman and CEO, said, "We are pleased with our customer's response to our continuing focus on quality, styling, and craftsmanship combined with our customer service initiatives."

Consolidated revenues for the thirteen weeks ended July 30, 2005 increased 22% to $229 million from $188 million last year. Store sales (Retail and Factory stores) increased by 17% to $163 million, compared to $139 million last year. Comparable store sales increased by 15%. Direct sales (Internet and Catalog) increased by 35% to $58 million, as compared to $43 million last year.

Gross margin increased to 42% of revenues in the second quarter, compared to 39% last year. The increase was primarily attributable to lower markdowns in all sales channels.

Selling, general and administrative expenses during the quarter were $77 million, or 34% of revenues vs. $66 million or 35% in the prior year period.

Net income for the second quarter increased by $16 million to $2 million, compared to a net loss of $14 million in the prior year. This increase resulted from the $12 million increase in operating income and a $4 million decrease in interest expense as a result of debt refinancing in the fourth quarter of 2004.

Consolidated revenues for the twenty-six weeks ended July 30, 2005 were $440 million compared to $334 million last year, an increase of 32%. Store sales increased by 27% to $308 million from $243 million, as comparable store sales increased by 24%. Direct sales increased by 48% to $118 million from $80 million last year. Direct sales in the first half of 2004 were adversely impacted by reduced inventory levels.

Gross margin for the twenty-six weeks ended July 30, 2005 increased to 44% of revenues compared to 40% last year, resulting from a decrease in buying and occupancy costs as a percentage of revenues and lower markdowns across all channels.

Selling, general and administrative expenses for the twenty-six weeks ended July 30, 2005 increased to $150 million, or 34% of revenues, from $130 million, or 39% last year.

Operating income for the twenty-six week period was $43 million compared to $5 million last year, an improvement of $38 million. Net income for the first half of 2005 was $7 million, compared to a loss of $38 million last year.

Inventory at July 30, 2005 was $111 million, an increase of 18% over the prior year,. There were no outstanding borrowings under the Company's working capital facility during the first half of 2004 or 2005.

Recent Development
On August 17, 2005, the Company filed a Registration Statement on Form S-1 with the U.S. Securities and Exchange Commission relating to the proposed initial public offering of its common stock.

Second Quarter Conference Call
The Company will not hold a conference call regarding second quarter results.

J.Crew Group, Inc. is a nationally recognized multi-channel retailer of quality women's and men's apparel, shoes and accessories. The Company operates 156 retail stores, the J.Crew catalog business, and 44 factory outlet stores.

Certain statements herein are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending or preferences in apparel, the performance of the Company's products within the prevailing retail environment, trade restrictions, political or financial instability in countries where the Company's goods are manufactured, postal rate increases, paper and printing costs, availability of suitable store locations at appropriate terms and other factors which are set forth in the Company's Form 10-K and in all filings with the SEC made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.