J Crew (JCG) 8-K J. Crew Group, Inc. Announces Second Quarter Fiscal 2010 Results

Exhibit 99.1

Company Contact:

James S. Scully

Chief Administrative Officer and

Chief Financial Officer

(212) 209-8040

Investor Contact:

Allison Malkin/Joe Teklits

ICR, Inc.

(203) 682-8200

J. CREW GROUP, INC. ANNOUNCES SECOND QUARTER FISCAL 2010 RESULTS

Second Quarter Revenues Rise 14% to $407.5 million

Second Quarter Diluted Earnings Per Share of $0.53

New York, NY – August 26, 2010 – J. Crew Group, Inc. [NYSE:JCG] today announced financial results for the three months (second quarter) and six months (first six months) ended July 31, 2010.

Second Quarter highlights:

• Revenues increased 14% to $407.5 million. Store sales increased 14% to $295.0 million, with comparable store sales increasing 11%. Comparable store sales decreased 5% in the second quarter of fiscal 2009. Direct sales (Internet and Phone) increased 16% to $102.5 million. Direct sales increased 6% to $88.2 million in the second quarter of fiscal 2009.

• Gross margin increased to 44.6% of revenues from 41.2% of revenues in the second quarter of fiscal 2009.

• Operating income increased 83% to $59.0 million, or 14.5% of revenues, compared to $32.2 million, or 9.0% of revenues, in the second quarter of fiscal 2009. Operating income in the second quarter of fiscal 2010 includes a benefit of $3.2 million in share-based compensation for recognition of forfeited share-based awards resulting primarily from the resignation of our President of Retail and Direct. Operating income in the second quarter of fiscal 2009 included charges of $2.6 million related to underperforming stores and lease termination actions.

• Net income was $34.9 million, or $0.53 per diluted share, compared to net income of $18.6 million, or $0.29 per diluted share, in the second quarter of fiscal 2009.

Millard Drexler, J. Crew’s Chairman and CEO stated: “While we are really pleased with the second quarter, it is more critical than ever to continue to move forward and invest in our business for quality, long term, earnings growth. It’s about moving, doing, creating – it never stops.”

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First Six Months highlights:

• Revenues increased 17% to $821.4 million. Store sales increased 17% to $585.0 million, with comparable store sales increasing 13%. Comparable store sales decreased 5% in the first six months of fiscal 2009. Direct sales increased 18% to $216.9 million. Direct sales decreased 0.3% to $183.5 million in the first six months of fiscal 2009.

• Gross margin increased to 46.8% of revenues from 41.7% of revenues in the first six months of fiscal 2009.

• Operating income increased 99% to $134.4 million, or 16.4% of revenues, compared to $67.5 million, or 9.6% of revenues, in the first six months of fiscal 2009. Operating income in the first six months of fiscal 2010 includes a benefit of $3.2 million in share-based compensation for recognition of forfeited share-based awards resulting primarily from the resignation of our President of Retail and Direct. Operating income in the first six months of fiscal 2009 included charges of $4.9 million related to our workforce reduction, underperforming stores and lease termination actions.

• Net income was $79.6 million, or $1.21 per diluted share, compared to net income of $39.1 million, or $0.61 per diluted share, in the first six months of fiscal 2009.

Balance Sheet highlights as of July 31, 2010:

• Cash and cash equivalents were $340.5 million at the end of the second quarter compared to $204.3 million at the end of the second quarter in the prior year.

• Inventories at the end of the second quarter were $219.5 million compared to $195.3 million at the end of the second quarter of fiscal 2009. Inventory per square foot increased 10% as compared to the end of the second quarter of fiscal 2009.

• Debt was $49.2 million at the end of the second quarter compared to $99.7 million at the end of the second quarter in the prior year. On August 24, 2010 the Company provided notice under its credit agreement of its intent to make a voluntary prepayment on August 31, 2010 of the remaining outstanding loan balance.

Guidance

For fiscal 2010 the Company currently expects diluted earnings per share in the range of $2.25 to $2.35, which includes a benefit of $0.03 for recognition of forfeited share-based awards from the resignation of our President of Retail and Direct, as compared to its previous guidance range of $2.35 to $2.45 and fiscal 2009 diluted earnings per share of $1.91. For the third quarter of fiscal 2010 the Company expects diluted earnings per share in the range of $0.55 to $0.60.

Conference Call Information

A conference call to discuss second quarter results is scheduled for today, August 26, 2010, at 4:30 PM Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-0784 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.jcrew.com. A replay of this call will be available until September 2, 2010 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 354793.

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About J. Crew Group, Inc.

J. Crew Group, Inc. is a nationally recognized multi-channel retailer of women’s, men’s and children’s apparel, shoes and accessories. As of August 26, 2010, the Company operates 247 retail stores (including 220 J.Crew retail stores, 9 crewcuts stores and 18 Madewell stores), the J. Crew catalog business, jcrew.com, madewell.com and 81 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company’s websitewww.jcrew.com.

Forward-Looking Statements:

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, our ability to compete with other retailers, the performance of the Company’s products within the prevailing retail environment, our strategy and expansion plans, systems upgrades, reliance on key personnel, 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.

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Exhibit (1)

J. Crew Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Amounts in thousands, except percentages and per share amounts)	Three Months Ended July 31, 2010			Three Months Ended August  1, 2009			Six Months Ended July  31, 2010			Six Months Ended August  1, 2009
Net sales
Stores	$	294,999		$	259,080		$	584,980		$	499,806
Direct		102,511			88,171			216,866			183,531
		397,510			347,251			801,846			683,337
Other		10,009			10,304			19,552			19,988
Total Revenues		407,519			357,555			821,398			703,325
Costs of goods sold, buying and occupancy costs		225,967			210,327			437,248			410,160
Gross Profit		181,552			147,228			384,150			293,165
As a percent of revenues		44.6	%		41.2	%		46.8	%		41.7	%
Selling, general administrative expenses		122,540			115,016			249,719			225,685
As a percent of revenues		30.1	%		32.2	%		30.4	%		32.1	%
Operating income		59,012			32,212			134,431			67,480
As a percent of revenues		14.5	%		9.0	%		16.4	%		9.6	%
Interest expense, net		632			1,078			1,259			2,155
Income before income taxes		58,380			31,134			133,172			65,325
Provision for income taxes		23,471			12,524			53,537			26,270
Net income	$	34,909		$	18,610		$	79,635		$	39,055
Income per share:
Basic	$	0.55		$	0.30		$	1.26		$	0.63
Diluted	$	0.53		$	0.29		$	1.21		$	0.61
Weighted average shares outstanding:
Basic		63,242			62,323			63,240			62,227
Diluted		65,917			64,326			65,993			63,864

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Exhibit (2)

J. Crew Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)	July 31, 2010		January 30, 2010		August 1, 2009
Assets
Current assets:
Cash and cash equivalents	$	340,489	$	298,107	$	204,274
Inventories		219,526		190,231		195,295
Prepaid expenses and other current assets		29,203		29,522		32,158
Prepaid Income taxes		7,876		1,455		963
Total current assets		597,094		519,315		432,690
Property and equipment, net		188,476		194,615		203,223
Other assets		24,428		24,628		19,857
Total assets	$	809,998	$	738,558	$	655,770
Liabilities and Stockholders’ equity
Current liabilities:
Accounts payable	$	131,311	$	127,733	$	116,110
Other current liabilities		89,204		106,652		82,207
Current portion of long-term debt (Note A)		49,229		—		1,028
Deferred income taxes, net		958		958		4,049
Total current liabilities		270,702		235,343		203,394
Long-term debt (Note A)		—		49,229		98,715
Deferred credits		64,548		67,646		72,185
Other liabilities		10,486		10,462		7,001
Stockholders’ equity		464,262		375,878		274,475
Total liabilities and stockholders’ equity	$	809,998	$	738,558	$	655,770

Note A – On August 24, 2010, the Company notified its lenders that it would make a voluntary prepayment of the remaining outstanding balance on its credit agreement on August 31, 2010. As a result, debt amounts have been classified as current portion of long-term debt as of July 31, 2010.

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Exhibit (3)

Actual and Projected Store Count and Square Footage (Note 1)

Fiscal 2010		(Note 2)
Quarter	Total stores open at beginning of the quarter	Number of stores opened during the quarter	Number of stores closed during the quarter	Total stores open at end of the quarter
1st Quarter (Actual)	321	4	0	325
2nd Quarter (Actual)	325	3	1	327
3rd Quarter (Projected)	327	4	0	331
4th Quarter (Projected)	331	4	0	335
Fiscal 2010
Quarter	Total gross square feet at beginning of the quarter	Gross square feet for stores opened or expanded during the quarter	Reduction of gross square feet for stores closed or downsized during the quarter	Total gross square feet at end of the quarter
1st Quarter (Actual)	1,958,140	20,168	(615)	1,977,693
2nd Quarter (Actual)	1,977,693	12,631	(7,822)	1,982,502
3rd Quarter (Projected)	1,982,502	14,257	0	1,996,759
4th Quarter (Projected)	1,996,759	25,102	0	2,021,861

Note 1 – Store count and square footage summary excludes three clearance store locations. Above summary also includes one factory store that is temporarily closed at the time of this announcement due to flooding.

Note 2 – Actual and Projected number of stores opened during Fiscal 2010 by quarter:

1^st Quarter – two retail and two factory stores (Actual).

2^nd Quarter – one retail, one factory and one Madewell store (Actual).

3^rd Quarter – two retail, one factory and one Madewell store (Projected).

4^th Quarter –two factory, one factory crewcuts and one Madewell stores (Projected).

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