J Crew 10Q 2010 Q2 Quarterly report

J Crew (JCG) 10-Q2010 Q2 Quarterly report

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UNITED STATES

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 July 31, 2010

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

Commission

File Number

Registrant, State of Incorporation Address

and Telephone Number

I.R.S. Employer

Identification No.

001-32927

22-2894486

J.CREW GROUP, INC.

(Incorporated in Delaware)

770 Broadway

New York, New York 10003

Telephone: (212) 209-2500

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock		Outstanding at August 16, 2010
Common Stock, $.01 par value per share		63,740,963 shares

J.CREW GROUP, INC.

TABLE OF CONTENTS – FORM 10-Q


		Page Number
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets at July 31, 2010 and January 30, 2010	3

	Condensed Consolidated Statements of Operations for the thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009	4

	Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended July 31, 2010 and August 1, 2009	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19

Item 4.	Controls and Procedures	20

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	20

Item 1A	Risk Factors	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Removed and Reserved	20

Item 5.	Other Information	20

Item 6.	Exhibits	21

PART I – FINANCIAL INFORMATION

ITEM 1.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

J.CREW GROUP, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except shares)


	July 31, 2010			January 30, 2010
Assets
Cash and cash equivalents	$	340,489		$	298,107
Merchandise inventories		219,526			190,231
Prepaid expenses and other current assets		29,203			29,522
Prepaid income taxes		7,876			1,455

Total current assets		597,094			519,315

Property and equipment – at cost		366,111			348,584
Less accumulated depreciation and amortization		(177,635	)		(153,969	)

		188,476			194,615

Deferred income taxes, net		14,851			14,851
Other assets		9,577			9,777

Total assets	$	809,998		$	738,558

Liabilities and Stockholders’ Equity
Accounts payable	$	131,311		$	127,733
Other current liabilities		89,204			106,652
Current portion of long-term debt		49,229			—
Deferred income taxes, net		958			958

Total current liabilities		270,702			235,343
Long-term debt		—			49,229
Deferred credits		64,548			67,646
Other liabilities		10,486			10,462

Total liabilities		345,736			362,680

Stockholders’ equity:
Common stock ($.01 par value; 200,000,000 shares authorized; 65,077,097 and 65,069,863 shares issued; 63,732,070 and 63,778,998 shares outstanding)		651			649
Additional paid-in capital		624,756			613,383
Accumulated deficit		(154,091	)		(233,731	)
Treasury stock, at cost (1,345,027 and 1,290,865 shares held)		(7,054	)		(4,423	)

Total stockholders’ equity		464,262			375,878

Total liabilities and stockholders’ equity	$	809,998		$	738,558

See notes to unaudited condensed consolidated financial statements.

J.CREW GROUP, INC.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share data)


		Thirteen weeks ended
		July 31, 2010		August 1, 2009
Revenues:
Net sales		$	397,510	$	347,251
Other			10,009		10,304

Total revenues			407,519		357,555
Cost of goods sold, including buying and occupancy costs			225,967		210,327

Gross profit			181,552		147,228
Selling, general and administrative expenses	��		122,540		115,016

Income from operations			59,012		32,212
Interest expense – net			632		1,078

Income before income taxes			58,380		31,134
Provision for income taxes			23,471		12,524

Net income		$	34,909	$	18,610

Net income per share:
Basic		$	0.55	$	0.30

Diluted		$	0.53	$	0.29

Weighted average shares outstanding:
Basic			63,242		62,323

Diluted			65,917		64,326

See notes to unaudited condensed consolidated financial statements.

J.CREW GROUP, INC.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share data)


	Twenty-six weeks ended
	July 31, 2010		August 1, 2009
Revenues:
Net sales	$	801,846	$	683,337
Other		19,552		19,988

Total revenues		821,398		703,325
Cost of goods sold, including buying and occupancy costs		437,248		410,160

Gross profit		384,150		293,165
Selling, general and administrative expenses		249,719		225,685

Income from operations		134,431		67,480
Interest expense – net		1,259		2,155

Income before income taxes		133,172		65,325
Provision for income taxes		53,537		26,270

Net income	$	79,635	$	39,055

Net income per share:
Basic	$	1.26	$	0.63

Diluted	$	1.21	$	0.61

Weighted average shares outstanding:
Basic		63,240		62,227

Diluted		65,993		63,864

See notes to unaudited condensed consolidated financial statements.

J.CREW GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Twenty-six weeks ended
	July 31, 2010			August 1, 2009
Cash flows from operating activities:
Net income	$	79,635		$	39,055
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization of property and equipment		24,227			26,859
Amortization of deferred financing costs		454			684
Share-based compensation		3,536			6,051
Excess tax benefit from share-based compensation plans		(4,733	)		(2,016	)
Changes in operating assets and liabilities:
Merchandise inventories		(29,295	)		(8,251	)
Prepaid expenses and other current assets		319			2,768
Other assets		(254	)		77
Accounts payable and other liabilities		(16,968	)		(6,921	)
Federal and state income taxes		(1,664	)		23,803
			��
Net cash provided by operating activities		55,257			82,109

Cash flow from investing activities:
Capital expenditures		(18,088	)		(28,407	)

Cash flows from financing activities:
Repayments of long-term debt		—			(257	)
Excess tax benefit from share-based compensation plans		4,733			2,016
Proceeds from share-based compensation plans		3,111			2,542
Repurchase of common shares		(2,631	)		(159	)

Net cash provided by financing activities		5,213			4,142

Increase in cash and cash equivalents		42,382			57,844
Cash and cash equivalents – beginning of period		298,107			146,430

Cash and cash equivalents – end of period	$	340,489		$	204,274

Supplemental cash flow information:
Income taxes paid	$	55,393		$	12,155

Interest paid	$	598		$	1,117

See notes to unaudited condensed consolidated financial statements.

J.CREW GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009

(Dollars in thousands, unless otherwise indicated)

1. Basis of Presentation

The condensed consolidated financial statements presented herein include the accounts of J.Crew Group, Inc. and its wholly owned subsidiaries (the “Company” or “Group”). All significant intercompany balances and transactions are eliminated in consolidation.

The condensed consolidated balance sheet as of July 31, 2010, the condensed consolidated statements of operations for the thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009, and the condensed consolidated statements of cash flows for the twenty-six weeks ended July 31, 2010 and August 1, 2009 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments, consisting of only normal recurring adjustments necessary for the fair presentation of the financial position, results of operations and cash flows, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles has been condensed or omitted. These financial statements should be read in conjunction with the financial statements and notes thereto included in the consolidated financial statements filed in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2010 (“fiscal 2009”).

The results of operations for the thirteen and twenty-six weeks ended July 31, 2010 are not necessarily indicative of the operating results for the full fiscal year.

2. Share-Based Compensation

A summary of the impact of share-based awards on financial condition and results of operations is as follows:


	Thirteen Weeks Ended					Twenty-six Weeks Ended
	July 31, 2010			August 1, 2009		July 31, 2010		August 1, 2009
Share-based compensation^(a)	$	(37	)	$	3,426	$	3,536	$	6,051

Proceeds from exercise of stock options	$	1,089		$	1,507	$	2,125	$	1,729
Proceeds from issuance of common stock under ASPP		963			813		986		813

Total proceeds from share-based compensation plans^(b)	$	2,052		$	2,320	$	3,111	$	2,542

Excess tax benefit from share-based compensation plans^(b)	$	615		$	1,884	$	4,733	$	2,016

(a)	Included in selling, general and administrative expenses.

(b)	Included in stockholders’ equity.

Share-based compensation for the thirteen and twenty-six weeks ended July 31, 2010 includes a benefit of $3.2 million for forfeited share-based awards resulting primarily from the resignation of the Company’s President of Retail and Direct on July 13, 2010.

During the first six months of fiscal 2010, the Company issued 43,123 stock options with a weighted average grant date fair value of $21.26. These options become exercisable with a weighted average exercise price of $41.70 over the requisite service period. The Company also issued 35,652 service-based restricted shares with a weighted average grant date fair value of $43.07. There have been no significant changes subsequent to the end of fiscal 2009 in the methods or valuation assumptions used to measure share-based awards.

3. Income Taxes

Group files a consolidated federal income tax return, which includes all of its wholly owned subsidiaries. Each subsidiary files separate, or combined where required, state tax returns in required jurisdictions.

IRS examinations for the tax years ended January 2006 and prior have been completed and settled. Various state and local jurisdiction tax authorities are in the process of examining income tax returns or hearing appeals for certain tax years ranging from 2002 to 2008. The results of these audits and appeals are not expected to have a significant effect on the results of operations or financial position.

J.CREW GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009

(Dollars in thousands, unless otherwise indicated)

The Company has $10.5 million in unrecognized tax benefits, reflected in other liabilities, including interest and penalties. The amount, if recognized, that would affect the effective annual tax rate is $7.6 million. While the Company expects the amount of unrecognized tax benefits to change in the next twelve months, the change is not expected to have a significant effect on the estimated effective annual tax rate, the results of operations or financial position. The outcome of tax matters is uncertain and unforeseen results can occur.

It is the Company’s policy to recognize interest income and expense related to income taxes as a component of interest expense, and penalties as a component of selling, general and administrative expenses. The amount of interest and penalties accrued at July 31, 2010 was $0.8 million.

4. Debt and Credit Agreements

Debt

Long-term debt consists of the following:


	July 31, 2010			January 30, 2010
Term loan	$	49,229		$	49,229
Less current portion		(49,229	)		—

Long-term debt	$	—		$	49,229

On May 15, 2006 (the “Closing Date”), J.Crew Operating Corp. (“Operating”), as borrower, Group and certain of Operating’s direct and indirect subsidiaries, as guarantors, entered into a Credit and Guaranty Agreement (the “Credit and Guaranty Agreement” or “Term Loan”) with certain lenders named therein as lenders, Goldman Sachs Credit Partners L.P. (“GSCP”) and Bear, Stearns & Co. Inc. as joint lead arrangers and joint bookrunners, GSCP as administrative agent and collateral agent, Bear Stearns Corporate Lending Inc. as syndication agent and Wachovia Bank, National Association as documentation agent.

The total amount borrowed by Operating under the Credit and Guaranty Agreement on the Closing Date was $285.0 million. Borrowings bear interest, at the Company’s option, at the base rate plus a margin of 0.75% or at LIBOR plus a margin of 1.75% per annum. All borrowings will mature on May 15, 2013.

The Company is required to make the following annual principal payments based upon certain conditions as set forth in the Term Loan: (i) 1% per annum of the original principal balance of the Term Loan due in quarterly installments and (ii) an amount equal to 50% of excess cash flow, as defined in the agreement, due within 90 days of the fiscal year-end. On August 31, 2010, Operating made a voluntary prepayment of the remaining principal amount outstanding under the Term Loan. See Note 7, Subsequent Event, for more information.

Credit Agreements

Credit Facility

On May 4, 2007, Group and certain of its subsidiaries, as guarantors, and Operating and certain of its subsidiaries, as borrowers, entered into a Second Amended and Restated Credit Agreement (the “Credit Facility”) with Citicorp USA, Inc. (“Citicorp”), as administrative agent, Citicorp, as collateral agent, and Bank of America, N.A. and Wachovia Bank, National Association, as syndication agents.

The Credit Facility provides for revolving loans and letters of credit of up to $200 million (which amount may be increased to up to $250 million subject to certain conditions) at floating interest rates based on the base rate, as defined, plus a margin of up to 0.25% or LIBOR plus a margin ranging from 1.0% to 1.25%. The margin is based upon quarterly excess availability levels specified in the Credit Facility. The total amount of availability is limited to the sum of: (a) 100% of qualified cash, (b) 90% of eligible receivables, (c) the lesser of 90% of eligible inventory and 92.5% of the net recovery percentage of inventories (as determined by periodic inventory appraisals) for the period August 1 through December 31, or 90% of the net recovery percentage of inventories for the period January 1 through July 31, (d) 65% of the fair market value of eligible real estate, and (e) less any reserves established by Citicorp. The Credit Facility expires on May 4, 2013.

Borrowings under the Credit Facility are guaranteed by the Company and certain of its subsidiaries, and are secured by a perfected first priority security interest in substantially all of the Company’s assets and those of certain of its subsidiaries. The Credit Facility includes restrictions on the Company’s ability and the ability of certain of its subsidiaries to incur additional indebtedness and liens, pay dividends or make other distributions, make investments, dispose of assets and merge. If excess availability under the Credit Facility is less than $20 million at any time, then the Company’s fixed charge coverage ratio for the most recently ended period of four consecutive fiscal quarters may not be less than 1.10 to 1.00 for that period.

J.CREW GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009

(Dollars in thousands, unless otherwise indicated)

If an event of default occurs under the Credit Facility, the lenders may declare all amounts outstanding under the Credit Facility immediately due and payable. In such event, the lenders may exercise any rights and remedies they may have by law or agreement, including the ability to cause all or any part of the collateral securing the Credit Facility to be sold.

Operating has been in compliance with its financial covenants during the terms of these agreements.

There were no short-term borrowings during the first six months of fiscal 2010. Outstanding standby letters of credit were $4.6 million and excess availability, as defined, under the Credit Facility was $195.4 million at July 31, 2010.

Demand Letter of Credit Facility

On October 31, 2007, Operating entered into an unsecured, demand letter of credit facility with The Hong Kong and Shanghai Banking Corporation Limited that provides for the issuance of up to $35.0 million of documentary letters of credit on a no fee basis. Outstanding documentary letters of credit were $11.8 million and availability under this facility was $23.2 million at July 31, 2010.

5. Net Income Per Share

The calculation of basic and diluted income per share is as follows:


	Thirteen Weeks Ended				Twenty-six Weeks Ended
	July 31, 2010		August 1, 2009		July 31, 2010		August 1, 2009
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 common shares outstanding:
Basic		63,242		62,323		63,240		62,227

Diluted		65,917		64,326		65,993		63,864


The number of shares of potentially dilutive securities excluded from the calculation of diluted earnings per share is as follows:
	Thirteen Weeks Ended				Twenty-six Weeks Ended
	July 31, 2010		August 1, 2009		July 31, 2010		August 1, 2009
Stock options		629		2,146		624		3,489
Unvested restricted stock		29		43		29		146

Total		658		2,189		653		3,635

6. Fair Value Measurements

The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

•

Level 2 – Observable inputs, other than quoted prices included in Level 1, such as quoted prices for markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Financial assets and liabilities

The Company does not have any financial assets or liabilities as of July 31, 2010 or January 30, 2010 that are measured in the financial statements at fair value on a recurring basis.

The fair value of the Company’s long-term debt, classified as current as of July 31, 2010 and long-term as of January 30, 2010, is estimated to be approximately $46,768 and $47,260 at July 31, 2010 and January 30, 2010, and is based on quoted market prices of

J.CREW GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009

(Dollars in thousands, unless otherwise indicated)

the debt (level 1 inputs). The carrying amounts of long-term debt were $49,229 at July 31, 2010 and January 30, 2010. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts payable and other current liabilities approximate fair value because of their short-term nature. The estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange.

Non-financial assets and liabilities

Except for certain leasehold improvements, the Company does not have any non-financial assets or liabilities as of July 31, 2010 or January 30, 2010 that are measured in the financial statements at fair value.

The Company performs impairment tests of certain long-lived assets whenever there are indicators of impairment. These tests typically contemplate assets at a store level (e.g. leasehold improvements). The Company recognizes an impairment loss when the carrying value of a long-lived asset is not recoverable in light of the undiscounted future cash flows and measures an impairment loss as the difference between the carrying amount and fair value of the asset based on discounted future cash flows. The Company has determined that the future cash flow approach (level 3 inputs) provides the most relevant and reliable means by which to determine fair value in this circumstance.

A summary of the impact of the impairment of certain long-lived assets on financial condition and results of operations is as follows:


	Thirteen Weeks Ended					Twenty-six Weeks Ended
	July 31, 2010			August 1, 2009		July 31, 2010		August 1, 2009
Carrying value of certain long-lived assets written down to fair value	$	535		$	1,673	$	535	$	2,704

Impairment charge	$	535	(a)	$	1,673	$	535	$	2,704

(a)	Impairment charge is a result of flooding of a factory store, which is temporarily closed.

7. Subsequent Event

On August 31, 2010, Operating made a voluntary prepayment of $49.2 million representing the remaining principal amount outstanding under the Term Loan. Accordingly, long-term debt was reclassified to current-portion of long-term debt on the condensed consolidated balance sheet as of July 31, 2010. In conjunction with the voluntary prepayment, the Company will record a non-cash charge of $1.4 million to interest expense in the third quarter of fiscal 2010 representing the remaining unamortized deferred financing costs incurred on the Term Loan.

Forward-Looking Statements

This report contains “forward-looking statements,” which include information concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. Many of these statements appear, in particular, under the headings “Condensed Consolidated Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” When used in this report, the words “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, our examination of historical operating trends, are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and beliefs, but there can be no assurance that we will realize our expectations or that our beliefs will prove correct.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Important factors that could cause our actual results to differ materially from those expressed as forward-looking statements are set forth in this report, including but not limited to those under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 30, 2010 filed with the Securities and Exchange Commission (the “SEC”). There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date they are made and are expressly qualified in their entirety by the cautionary statements included in this report. Except as may be required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances occurring after the date they were made or to reflect the occurrence of unanticipated events.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This document should be read in conjunction with the Management’s Discussion and Analysis section of our Annual Report on Form 10-K for the fiscal year ended January 30, 2010 filed with the SEC. When used herein, the terms “Group,” “Company,” “we,” “us” and “our” refer to J. Crew Group, Inc., including wholly owned consolidated subsidiaries.

Executive Overview

J.Crew^® is a nationally recognized apparel and accessories retailer that we believe embraces a high standard of style, craftsmanship, quality and customer service. We are a fully integrated multi-brand, multi-channel, specialty retailer that operates stores and websites to consistently communicate our vision. We believe our customer base consists primarily of affluent, college-educated and professional and fashion-conscious women and men.

We have two primary sales channels: Stores, which consists of our J.Crew retail, J.Crew factory, clearance, crewcuts^®, and Madewell^® stores; and Direct, which consists of (i) our websites for the J.Crew, crewcuts and Madewell brands and (ii) our J.Crew and crewcuts catalogs. As of July 31, 2010, we operated 246 retail stores (including nine crewcuts and 18 Madewell stores), 81 factory stores (including one temporarily closed store due to flooding and one crewcuts factory store), and three clearance stores, throughout the United States; compared to 242 retail stores (including eight crewcuts and 18 Madewell stores), 77 factory stores (including one crewcuts factory store) and two clearance stores as of August 1, 2009.

The following is a summary of our revenues for the thirteen and twenty-six week periods ended July 31, 2010 and August 1, 2009:


	Thirteen Weeks Ended				Twenty-six Weeks Ended
(Dollars in millions)	July 31, 2010		August 1, 2009		July 31, 2010		August 1, 2009
Stores	$	295.0	$	259.1	$	585.0	$	499.8
Direct		102.5		88.2		216.9		183.5

Net sales		397.5		347.3		801.9		683.3
Other(a)		10.0		10.3		19.5		20.0

Total revenues	$	407.5	$	357.6	$	821.4	$	703.3

(a)	Consists primarily of shipping and handling fees.

The following is a summary of second quarter fiscal 2010 highlights:

•

Revenues increased 14.0% to $407.5 million.

•

Comparable store sales increased 10.6%.

•

Direct net sales increased 16.3% to $102.5 million.

•

Income from operations increased to $59.0 million, or 14.5% of revenues.

•

Pre-tax losses of Madewell decreased to $3.0 million in the second quarter of fiscal 2010 from $5.2 million in the second quarter last year.

•

We opened one J.Crew retail store, one J.Crew factory store and one Madewell store. We closed one J.Crew retail store.

The following is a summary of first half fiscal 2010 highlights:

•

Revenues increased 16.8% to $821.4 million.

•

Comparable store sales increased 12.8%.

•

Direct net sales increased 18.2% to $216.9 million.

•

Income from operations increased to $134.4 million, or 16.4% of revenues.

•

Pre-tax losses of Madewell decreased to $5.9 million in the first half of fiscal 2010 from $9.0 million in the first half last year.

•

We opened three J.Crew retail stores, three J.Crew factory stores (one of which is temporarily closed due to flooding in Tennessee) and one Madewell store. We closed one J.Crew retail store.

Results of Operations – Second Quarter of Fiscal 2010 compared to Second Quarter of Fiscal 2009


	Thirteen Weeks Ended July 31, 2010				Thirteen Weeks Ended August 1, 2009				Increase / (Decrease)
(Dollars in millions)	Amount		Percent of Revenues		Amount		Percent of Revenues		Dollars			Percentage
Revenues	$	407.5	100.0	%	$	357.6	100.0	%	$	49.9		14.0	%
Gross profit		181.6	44.6			147.2	41.2			34.4		23.3
Selling, general and administrative expenses		122.5	30.1			115.0	32.2			7.5		6.5
Income from operations		59.0	14.5			32.2	9.0			26.8		83.2
Interest expense, net		0.6	0.2			1.1	0.3			(0.5	)	(41.4	)
Income taxes		23.5	5.8			12.5	3.5			11.0		87.4
Net income	$	34.9	8.6	%	$	18.6	5.2	%	$	16.3		87.6	%

Revenues

Revenues increased $49.9 million, or 14.0%, to $407.5 million in the second quarter of fiscal 2010 from $357.6 million in the second quarter last year. This increase resulted from increases in comparable store sales and Direct sales, and non-comparable store sales. Consistent with the overall macroeconomic environment and uncertainty in consumer spending, we believe that the rate of revenue growth in the second half of fiscal 2010 will be lower than the rate in the first half of the year.

Stores sales increased $35.9 million, or 13.9%, to $295.0 million in the second quarter of fiscal 2010 from $259.1 million in the second quarter last year. Comparable store sales increased 10.6% to $284.1 million in the second quarter of fiscal 2010 from $256.8 million last year. Comparable store sales decreased 5.1% in the second quarter of fiscal 2009. Non-comparable store sales were $10.9 million in the second quarter of fiscal 2010.

Direct sales increased $14.3 million, or 16.2%, to $102.5 million in the second quarter of fiscal 2010 from $88.2 million in the second quarter last year. Direct sales increased $5.0 million, or 6.0%, in the second quarter of fiscal 2009.

The increase in Stores and Direct sales in the second quarter of fiscal 2010 was primarily driven by an increase in sales of women’s apparel, specifically knits, sweaters, and shirts. Sales of men’s and children’s apparel, and accessories also increased during the quarter.

The approximate percentage of our sales by product category, based on our internal merchandising system, is as follows:


	Thirteen Weeks Ended
	July 31, 2010		August 1, 2009
Apparel:
Women’s	63	%	65	%
Men’s	22		20
Children’s	4		3
Accessories	11		12

	100	%	100	%

Other revenues, which consist primarily of shipping and handling fees, decreased $0.3 million, or 2.9%, to $10.0 million in the second quarter of fiscal 2010 from $10.3 million in the second quarter last year. This decrease resulted primarily from shipping and handling promotions offsetting the impact of shipping and handling fees from increased direct sales. Other revenues decline as we increase the frequency of shipping and handling promotions.

Gross Profit

Gross profit increased $34.4 million to $181.6 million in the second quarter of fiscal 2010 from $147.2 million in the second quarter last year. This increase resulted from the following factors:


(Dollars in millions)
Increase in revenues	$	27.0
Increase in merchandise margin		8.8
Increase in buying and occupancy costs		(1.4	)

	$	34.4

Gross margin increased to 44.6% in the second quarter of fiscal 2010 from 41.2% in the second quarter last year. The increase in gross margin was driven by a 220 basis point expansion in merchandise margin due to decreased markdowns and a 120 basis point decrease in buying and occupancy costs as a percentage of revenues.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $7.5 million, or 6.5%, to $122.5 million in the second quarter of fiscal 2010 from $115.0 million in the second quarter last year. This increase primarily resulted from the following:

Increases

•

$5.0 million in corporate overhead—primarily payroll, payroll-related and consulting;

•

$4.2 million in Stores operating expenses—primarily payroll and payroll-related; and

•

$0.9 million in advertising and marketing expenses.

Decreases

•

$3.5 million in share-based and incentive compensation, which includes a benefit of $3.2 million for forfeited share-based awards resulting primarily from the resignation of our President of Retail and Direct; and

•

$2.1 million in additional charges incurred last year related to impairment and accelerated depreciation of underperforming stores.

As a percentage of revenues, selling, general and administrative expenses decreased to 30.1% in the second quarter of fiscal 2010 from 32.2% in the second quarter last year, primarily due to increases in comparable store sales and Direct sales.

Interest Expense, Net

Interest expense, net of interest income, decreased $0.5 million to $0.6 million in the second quarter of fiscal 2010 from $1.1 million in second quarter last year due primarily to lower debt outstanding resulting from a voluntary prepayment of $50.0 million in the fourth quarter of fiscal 2009.

Income Taxes

The income tax provisions reflect the estimated annual effective tax rate of approximately 40%.

Net Income

Net income increased $16.3 million to $34.9 million in the second quarter of fiscal 2010 from $18.6 million in the second quarter of fiscal 2009. This increase was due to a $34.4 million increase in gross profit and a $0.5 million decrease in interest expense, offset by a $7.5 million increase in selling, general and administrative expenses and a $11.0 million increase in the provision for income taxes.

Results of Operations – First Half of Fiscal 2010 compared to First Half of Fiscal 2009


	Twenty-six Weeks Ended July 31, 2010				Twenty-six Weeks Ended August 1, 2009				Increase / (Decrease)
(Dollars in millions)	Amount		Percent of Revenues		Amount		Percent of Revenues		Dollars			Percentage
Revenues	$	821.4	100.0	%	$	703.3	100.0	%	$	118.1		16.8	%
Gross profit		384.2	46.8			293.2	41.7			91.0		31.0
Selling, general and administrative expenses		249.7	30.4			225.7	32.1			24.0		10.7
Income from operations		134.4	16.4			67.5	9.6			66.9		99.2
Interest expense, net		1.3	0.2			2.2	0.3			(0.9	)	(41.6	)
Income taxes		53.5	6.5			26.3	3.7			27.2		103.8
Net income	$	79.6	9.7	%	$	39.1	5.6	%	$	40.5		103.9	%

Revenues

Revenues increased $118.1 million, or 16.8%, to $821.4 million in the first half of fiscal 2010 from $703.3 million in the first half last year. This increase resulted from increases in comparable store sales and Direct sales, and non-comparable store sales. Consistent with the overall macroeconomic environment and uncertainty in consumer spending, we believe that the rate of revenue growth in the second half of fiscal 2010 will be lower than the rate in the first half of the year.

Stores sales increased $85.2 million, or 17.0%, to $585.0 million in the first half of fiscal 2010 from $499.8 million in the first half last year. Comparable store sales increased 12.8% to $559.1 million in the first half of fiscal 2010 from $495.6 million last year. Comparable store sales decreased 5.1% in the first half of fiscal 2009. Non-comparable store sales were $25.9 million in the first half of fiscal 2010.

Direct sales increased $33.4 million, or 18.2%, to $216.9 million in the first half of fiscal 2010 from $183.5 million in the first half last year. Direct sales decreased $0.6 million, or 0.3%, in the first half of fiscal 2009.

The increase in Stores and Direct sales in the first half of fiscal 2010 was primarily driven by an increase in sales of women’s apparel, specifically knits, sweaters, and shirts. Sales of men’s and children’s apparel, and accessories also increased during the first half of fiscal 2010.

The approximate percentage of our sales by product category, based on our internal merchandising system, is as follows:


	Twenty-six Weeks Ended
	July 31, 2010		August 1, 2009
Apparel:
Women’s	65	%	67	%
Men’s	19		18
Children’s	5		3
Accessories	11		12

	100	%	100	%

Other revenues, which consist primarily of shipping and handling fees, decreased $0.5 million, or 2.5%, to $19.5 million in the first half of fiscal 2010 from $20.0 million in the first half of last year. This decrease resulted primarily from shipping and handling promotions offsetting the impact of shipping and handling fees from increased direct sales. Other revenues decline as we increase the frequency of shipping and handling promotions.

Gross Profit

Gross profit increased $91.0 million to $384.2 million in the first half of fiscal 2010 from $293.2 million in the first half of last year. This increase resulted from the following factors:


(Dollars in millions)
Increase in revenues	$	64.2
Increase in merchandise margin		32.3
Increase in buying and occupancy costs		(5.5	)

	$	91.0

Gross margin increased to 46.8% in the first half of fiscal 2010 from 41.7% in the first half of last year. The increase in gross margin was driven by��a 400 basis point expansion in merchandise margin due to decreased markdowns and a 110 basis point decrease in buying and occupancy costs as a percentage of revenues.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $24.0 million, or 10.7%, to $249.7 million in the first half of fiscal 2010 from $225.7 million in the first half of last year. This increase primarily resulted from the following:

Increases

•

$11.1 million in corporate overhead—primarily payroll, payroll-related and consulting;

•

$10.9 million in Stores operating expenses—primarily payroll, payroll-related and maintenance;

•

$2.3 million in advertising and marketing expenses; and

•

$0.1 million in share-based and incentive compensation, which includes a benefit of $3.2 million for forfeited share-based awards resulting primarily from the resignation of our President of Retail and Direct.

Decreases

•

$3.2 million in additional charges incurred last year related to impairment and accelerated depreciation of underperforming stores; and

•

$1.3 million of severance and related costs incurred last year related to our workforce reduction.

As a percentage of revenues, selling, general and administrative expenses decreased to 30.4% in the first half of fiscal 2010 from 32.1% in the first half last year, primarily due to increases in comparable store sales and Direct sales.

Interest Expense, Net

Interest expense, net of interest income, decreased $0.9 million to $1.3 million in the first half of fiscal 2010 from $2.2 million in first half of last year due primarily to lower debt outstanding resulting from a voluntary prepayment of $50.0 million in the fourth quarter of fiscal 2009.

Income Taxes

The income tax provisions reflect the estimated annual effective tax rate of approximately 40%.

Net Income

Net income increased $40.5 million to $79.6 million in the first half of fiscal 2010 from $39.1 million in the first half of fiscal 2009. This increase was due to a $91.0 million increase in gross profit and a $0.9 million decrease in interest expense, offset by $24.0 million increase in selling, general and administrative expenses and a $27.2 million increase in the provision for income taxes.

Liquidity and Capital Resources

Our primary sources of liquidity are our current balances of cash and cash equivalents, cash flows from operations and borrowings available under the Credit Facility. Our primary cash needs are (i) capital expenditures in connection with opening new stores, remodeling existing stores and information technology system enhancements, (ii) working capital requirements and (iii) debt service requirements. The most significant components of our working capital are merchandise inventories, accounts payable and other current liabilities.

Operating Activities


	Twenty-six Weeks Ended
	July 31, 2010			August 1, 2009
	(amounts in millions)
Net income	$	79.6		$	39.1
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization of property and equipment		24.2			26.9
Amortization of deferred financing costs		0.5			0.7
Share-based compensation		3.5			6.1
Excess tax benefit from share-based compensation plans		(4.7	)		(2.0	)
Changes in operating assets and liabilities		(47.8	)		11.3

Net cash provided by operations	$	55.3		$	82.1

Cash provided by operating activities in the first half of fiscal 2010 was $55.3 million and consisted of (i) net income of $79.6 million, (ii) adjustments to net income of $28.2 million, offset by (iii) changes in operating assets and liabilities (including the impact of excess tax benefits from share-based compensation plans) of $52.5 million due primarily to seasonal increases in inventories and related accounts payable, and an increase in prepaid income taxes.

Cash provided by operating activities in the first half of fiscal 2009 was $82.1 million and consisted of (i) net income of $39.1 million, (ii) adjustments to net income of $33.7 million, offset by (iii) changes in operating assets and liabilities (including the impact of excess tax benefits from share-based compensation plans) of $9.3 million due primarily to normal business fluctuations.

Investing Activities

Capital expenditures were $18.1 million in the first half of fiscal 2010 compared to $28.4 million in the first half of last year. Capital expenditures for the opening of new stores were $6.5 million and $15.4 million in the first half of fiscal 2010 and 2009, respectively. The remaining capital expenditures were for information technology enhancements, store renovations and corporate facilities. Capital expenditures are planned at approximately $55 million for fiscal year 2010, including $16 million for new stores and $20 million for information technology enhancements, and the remainder for store renovations and corporate facilities.

Financing Activities


	Twenty-six Weeks Ended
	July 31, 2010			August 1, 2009
	(amounts in millions)
Repayments of long-term debt	$	—		$	(0.3	)
Excess tax benefit from share-based compensation plans		4.7			2.0
Proceeds from share-based compensation plans		3.1			2.6
Repurchase of common shares		(2.6	)		(0.2	)

Net cash provided by financing activities	$	5.2		$	4.1

Cash provided by financing activities in the first half of fiscal 2010 was $5.2 million due to (i) excess tax benefits from share-based compensation plans of $4.7 million, (ii) proceeds from share-based compensation plans of $3.1 million offset by (iii) cash used to repurchase common shares of $2.6 million in connection with net settlements of restricted stock vestings.

Cash provided by financing activities in the first half of fiscal 2009 was $4.1 million due primarily to (i) proceeds from share-based compensation plans of $2.6 million and (ii) excess tax benefits from share-based compensation plans of $2.0 million.

Amended and Restated Credit Agreement

Operating has been in compliance with its financial covenants during the terms of these agreements.

There were no short-term borrowings during the first half of fiscal 2010. Outstanding standby letters of credit were $4.6 million and excess availability, as defined, under the Credit Facility was $195.4 million at July 31, 2010.

Demand Letter of Credit Facility

Outlook

Our short-term and long-term liquidity needs arise primarily from capital expenditures associated with our growth strategy, principal and interest payments on our indebtedness and working capital requirements. Management anticipates that capital expenditures in fiscal 2010 will be approximately $55 million, primarily for opening new stores, information technology enhancements, store renovations and corporate facilities. As of July 31, 2010, excess availability, as defined, under the Credit Facility was $195.4 million. Our annual debt service obligations will change by $0.5 million per year for each 1.0% change in the average interest rate we pay based on the $49.2 million balance of variable interest rate debt outstanding at July 31, 2010. On August 31, 2010, we made a voluntary prepayment of $49.2 million representing the remaining principal amount outstanding under the Term Loan. Management believes that our current balances of cash and cash equivalents, cash flow from operations and availability under the Credit Facility will be adequate to finance working capital needs, planned capital expenditures and debt service obligations for the next twelve months. Our ability to fund our operations and make planned capital expenditures, to make scheduled debt payments, to refinance indebtedness and to remain in compliance with the financial covenants under our debt agreements depends on our future financing activities, our future operating performance and our future cash flow, which in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control. See Item 1A. “Risk Factors” in part II of this report.

Off Balance Sheet Arrangements

We enter into documentary letters of credit to facilitate the international purchase of merchandise. We also enter into standby letters of credit to secure certain of our obligations, including insurance programs and duties related to import purchases. As of July 31, 2010, we had the following obligations under letters of credit in future periods:


	Total		Within 1 Year		2-3 Years		4-5 Years		After 5 Years
	(amounts in millions)
Letters of Credit
Standby	$	4.6	$	—	$	—	$	—	$	4.6
Documentary		11.8		11.8		—		—		—

	$	16.4	$	11.8	$	—	$	—	$	4.6

Cyclicality and Seasonality

The industry in which we operate is cyclical, and consequently our revenues are affected by general economic conditions. Purchases of apparel and accessories are sensitive to a number of factors that influence the levels of consumer spending, including economic conditions and the level of disposable consumer income, consumer debt, interest rates and consumer confidence.

Our business is seasonal. As a result, our revenues fluctuate from quarter to quarter. We have four distinct selling seasons that align with our four fiscal quarters. Revenues are usually higher in our fourth fiscal quarter, particularly December, as customers make holiday purchases. Approximately 29% of our revenues in fiscal year 2009 occurred in the fourth quarter. Our working capital requirements also fluctuate throughout the year, increasing substantially in September and October in anticipation of holiday season inventory requirements.

Critical Accounting Policies

A summary of our critical accounting policies is included in the Management’s Discussion and Analysis section of our Annual Report on Form 10-K for the fiscal year ended January 30, 2010 filed with the Securities and Exchange Commission.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our principal market risk relates to interest rate sensitivity, which is the risk that future changes in interest rates will reduce our net income or net assets. Our Credit Facility and Term Loan carry floating rates of interest that are a function of prime rate or LIBOR. A one percentage point per annum change in the interest rate on our variable rate debt would result in a change in income before taxes of approximately $100,000 for each $10.0 million of borrowings under the Credit Facility and approximately $0.5 million for the $49.2 million of borrowings under the Term Loan. On August 31, 2010, we made a voluntary prepayment of $49.2 million representing the remaining principal amount outstanding under the Term Loan.

ITEM 4.

CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and our Chief Administrative Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and our Chief Administrative Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

There were no changes in internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

The Company is a party to routine litigation arising in the ordinary course of its business. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in the Company’s opinion, any such liability will not have a material adverse effect on its consolidated financial position, consolidated results of operations or liquidity.

ITEM 1A.

RISK FACTORS

The Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2010 contains a detailed discussion of certain risk factors that could materially adversely affect our business, our operating results, or our financial condition. There have been no material changes to the risk factors previously disclosed.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

REMOVED AND RESERVED

ITEM

5. OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Articles of Incorporation and Bylaws


Exhibit No.		Document

3.1		Certificate of Incorporation of J. Crew Group, Inc. Incorporated by reference to Exhibit 3.1 to the S-1/A Registration Statement filed on October 11, 2005.

3.2		Bylaws of J. Crew Group, Inc. Incorporated by reference to Exhibit 3.2 to the Form 8-K/A filed on October 17, 2005.

Material Contracts


Exhibit No.		Document

10.1		Amended and Restated Loan and Security Agreement, dated as of December 23, 2004, by and among J.Crew Operating Corp., J.Crew Inc., Grace Holmes, Inc. d/b/a J.Crew Retail, H.F.D. No. 55, Inc. d/b/a J.Crew Factory as Borrowers, J.Crew Group, Inc., J.Crew International, Inc., J.Crew Intermediate LLC as Guarantors, Wachovia Capital Markets LLC as Arranger and Bookrunner, Wachovia Bank, National Association as Administrative Agent, Bank of America, N.A. as Syndication Agent, Congress Financial Corporation as Collateral Agent, and the Lenders (the “Credit Facility”).*

10.2		Amendment No. 2, dated as of May 15, 2006, to the Credit Facility by and among Operating, J.Crew Inc., Grace Holmes, Inc., H.F.D. No. 55, Inc., as borrowers, Group, J.Crew International, Inc. and Madewell Inc., as guarantors, the lenders named therein and Wachovia Bank, National Association, successor by merger to Congress Financial Corporation, a national banking association, in its capacity as administrative agent and collateral agent for lenders (the “Agent”), and Amendment No. 1 to Guarantee, dated as of May 15, 2006, by the borrowers and guarantors in favor of the Agent.*

10.3		Second Amended and Restated Credit Agreement, dated as of May 4, 2007, among J.Crew Group, Inc. and certain subsidiaries of J.Crew Group, Inc., as borrowers and guarantors, the lenders and issuers party thereto and Citicorp USA, Inc., as administrative agent (the “Credit Agreement”).*

10.4		Amended and Restated Pledge and Security Agreement, dated as of May 4, 2007, by J.Crew Group, Inc. and certain subsidiaries of J.Crew Group, Inc., as grantors, in favor of Citicorp USA, Inc., as administrative agent.*

10.5		Pledge and Security Agreement Term Loan Collateral, dated as of May 15, 2006, by and among J.Crew Operating Corp., J.Crew Group, Inc. and certain subsidiaries of J.Crew Operating Corp. named as grantors therein and Goldman Sachs Credit Partners L.P., as collateral agent.*

10.6		Intercreditor Agreement, dated as of May 15, 2006, by and among J.Crew Operating Corp., J.Crew Group, Inc. and certain subsidiaries of J.Crew Operating Corp. named as guarantors in the Credit and Guaranty Agreement, Goldman Sachs Credit Partners L.P., in its capacity as administrative agent and collateral agent under the Credit and Guaranty Agreement, and Wachovia Bank, National Association, in its capacity as administrative agent and collateral agent under the Credit Facility.*

10.7		Third Amended and Restated Employment Agreement by and among the Company, Operating and Millard S. Drexler dated as of October 20, 2005 and executed as of July 13, 2010.*

10.8		Amended and Restated Employment Agreement, dated July 15, 2010, between the Company and Jenna Lyons Mazeau.*

Certifications


Exhibit No.		Document

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

Interactive Data Files


Exhibit No.		Document

101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at July 31, 2010 and January 30, 2010, (ii) the Condensed Consolidated Statements of Operations for the thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009, (iii) the Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended July 31, 2010 and August 1, 2009, and (iv) the Notes to Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text.**

*	Filed herewith.

**	Furnished herewith.

SIGNATURES

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


	J. CREW GROUP, INC.
	(Registrant)

Date: September 2, 2010	By:	/S/ MILLARD DREXLER
		Millard Drexler
		Chairman of the Board and Chief Executive Officer

Date: September 2, 2010	By:	/S/ JAMES SCULLY
		James Scully
		Chief Administrative Officer and Chief Financial Officer

EXHIBIT INDEX

Articles of Incorporation and Bylaws


Exhibit No.		Document

3.1		Certificate of Incorporation of J. Crew Group, Inc. Incorporated by reference to Exhibit 3.1 to the S-1/A Registration Statement filed on October 11, 2005.

3.2		Bylaws of J. Crew Group, Inc. Incorporated by reference to Exhibit 3.2 to the Form 8-K/A filed on October 17, 2005.

Material Contracts


Exhibit No.		Document

10.1		Amended and Restated Loan and Security Agreement, dated as of December 23, 2004, by and among J.Crew Operating Corp., J.Crew Inc., Grace Holmes, Inc. d/b/a J.Crew Retail, H.F.D. No. 55, Inc. d/b/a J.Crew Factory as Borrowers, J.Crew Group, Inc., J.Crew International, Inc., J.Crew Intermediate LLC as Guarantors, Wachovia Capital Markets LLC as Arranger and Bookrunner, Wachovia Bank, National Association as Administrative Agent, Bank of America, N.A. as Syndication Agent, Congress Financial Corporation as Collateral Agent, and the Lenders (the “Credit Facility”).*

10.2		Amendment No. 2, dated as of May 15, 2006, to the Credit Facility by and among Operating, J.Crew Inc., Grace Holmes, Inc., H.F.D. No. 55, Inc., as borrowers, Group, J.Crew International, Inc. and Madewell Inc., as guarantors, the lenders named therein and Wachovia Bank, National Association, successor by merger to Congress Financial Corporation, a national banking association, in its capacity as administrative agent and collateral agent for lenders (the “Agent”), and Amendment No. 1 to Guarantee, dated as of May 15, 2006, by the borrowers and guarantors in favor of the Agent.*

10.3		Second Amended and Restated Credit Agreement, dated as of May 4, 2007, among J.Crew Group, Inc. and certain subsidiaries of J.Crew Group, Inc., as borrowers and guarantors, the lenders and issuers party thereto and Citicorp USA, Inc., as administrative agent (the “Credit Agreement”).*

10.4		Amended and Restated Pledge and Security Agreement, dated as of May 4, 2007, by J.Crew Group, Inc. and certain subsidiaries of J.Crew Group, Inc., as grantors, in favor of Citicorp USA, Inc., as administrative agent.*

10.5		Pledge and Security Agreement Term Loan Collateral, dated as of May 15, 2006, by and among J.Crew Operating Corp., J.Crew Group, Inc. and certain subsidiaries of J.Crew Operating Corp. named as grantors therein and Goldman Sachs Credit Partners L.P., as collateral agent.*

10.6		Intercreditor Agreement, dated as of May 15, 2006, by and among J.Crew Operating Corp., J.Crew Group, Inc. and certain subsidiaries of J.Crew Operating Corp. named as guarantors in the Credit and Guaranty Agreement, Goldman Sachs Credit Partners L.P., in its capacity as administrative agent and collateral agent under the Credit and Guaranty Agreement, and Wachovia Bank, National Association, in its capacity as administrative agent and collateral agent under the Credit Facility.*

10.7		Third Amended and Restated Employment Agreement by and among the Company, Operating and Millard S. Drexler dated as of October 20, 2005 and executed as of July 13, 2010.*

10.8		Amended and Restated Employment Agreement, dated July 15, 2010, between the Company and Jenna Lyons Mazeau.*

Certifications


Exhibit No.		Document

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

Interactive Data Files


Exhibit No.		Document

101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at July 31, 2010 and January 30, 2010, (ii) the Condensed Consolidated Statements of Operations for the thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009, (iii) the Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended July 31, 2010 and August 1, 2009, and (iv) the Notes to Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text.**

*	Filed herewith.

**	Furnished herewith.

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company