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News Release

J.Crew Group Reports A Decrease In Operating Loss For The First Quarter And Continued Turnaround Progress

J.Crew Group Reports A Decrease In Operating Loss For The First Quarter And Continued Turnaround Progress

NEW YORK (June 4, 2004) - J. Crew announced today that its operating loss for the thirteen weeks ended May 1, 2004 decreased to $2 million from an operating loss of $10 million last year, as the company continues to benefit from its new merchandise strategy and the revitalization of the J.Crew brand.

"Demand for J. Crew apparel and accessories is ahead of our expectations and we are experiencing strong performance across retail, Internet and catalog," said Millard Drexler, Chairman and CEO. "Our conservative inventory strategy affected sales in the first quarter - and we have since made appropriate adjustments in the current quarter to reflect recent trends in our business. Our intense focus on product design, quality and fit - combined with the understanding that we are all here only to serve our customers - is striking a receptive chord."

Consolidated revenues for the first quarter decreased 10% to $145 million from $161 million in the comparable period last year. The decline was due to a 34% decrease ($19 million) in net sales of the Direct business (Internet and catalog). This anticipated decrease resulted from reductions in catalog pages, circulation and clearance sales. Retail sales (including Factory) increased to $104 million from $98 million last year with a comparable store sales increase of 4%, despite tighter inventories.

The operating results for the quarter reflect a gross margin increase from 36% in 2003 to 42% in 2004. This increase resulted from decreased markdowns and clearance sales in all channels.

Net loss for the first quarter increased to $23 million from $20 million in the prior year due to a newly required inclusion of preferred dividends ($8 million) as interest expense in 2004. Last year, these dividends were recorded as a direct charge to stockholders' deficit.

The balance sheet at May 1, 2004 included a $12 million increase in cash and cash equivalents, and inventories of $85 million, down 15%. There were no outstanding borrowings under the Company's working capital facility at the end of the quarter.

First Quarter Conference Call
The Company's first quarter investor conference call will be held today, June 4, 2004 at 11 a.m. eastern time. The event will be available through an audio webcast at www.jcrew.com (click on "Help" and "Investor Relations") and www.companyboardroom.com. A replay of the call will be archived on those websites and will also be available by telephone through June 11, 2004 at (888) 286-8010, reference #88517889.

J. Crew Group, Inc. is a leading retailer of men's and women's apparel, shoes and accessories. The Company operates 155 retail stores, the J. Crew catalog business, jcrew.com, and 42 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.