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News Release

J. Crew Group, Inc. Announces First Quarter Fiscal 2010 Results


First Quarter Revenues Rise 20% to $413.9 million
First Quarter Diluted Earnings Per Share of $0.68

NEW YORK, May 27, 2010 /PRNewswire via COMTEX/ --J. Crew Group, Inc. (NYSE: JCG) today announced financial results for the three months ended May 1, 2010 (first quarter fiscal 2010).

First quarter highlights:

  • Revenues increased 20% to $413.9 million. Store sales increased 20% to $290.0 million, with comparable store sales increasing 15%. Comparable store sales decreased by 5% in the first quarter of fiscal 2009. Direct sales (Internet and Phone) increased 20% to $114.4 million. Direct sales decreased by 6% to $95.4 million in the first quarter of fiscal 2009.
  • Gross margin increased to 49.0% of revenues from 42.2% of revenues in the first quarter of fiscal 2009. The increase in gross margin is primarily related to decreased markdowns and promotional selling in the first quarter of 2010 compared to the first quarter of 2009.
  • Operating income increased 113.8% to $75.4 million, or 18.2% of revenues, compared with operating income of $35.3 million, or 10.2% of revenues, in the first quarter of fiscal 2009.
  • Net income was $44.7 million, or $0.68 per diluted share. Net income was $20.4 million, or $0.32 per diluted share, in the first quarter of fiscal 2009.

Millard Drexler, J. Crew's Chairman and CEO stated: "We are very pleased with our first quarter results. We are and will continue to be focused on our mission - to innovate in our design, style, quality and customer service and to invest in our business, our associates and our customers for the long term."

Balance Sheet highlights as of May 1, 2010

  • Cash and cash equivalents were $332.3 million at the end of the first quarter compared to $154.6 million at the end of the first quarter in the prior year.
  • Inventories at the end of the first quarter were $193.1 million, compared to $193.9 million at the end of the first quarter of fiscal 2009. Inventory per square foot decreased 3.9% as compared to the end of the first quarter of fiscal 2009.

Guidance

The Company issued its initial guidance for the second quarter and updated its guidance for fiscal 2010. The Company currently expects second quarter fiscal 2010 diluted earnings per share in the range of $0.40 to $0.45 and fiscal 2010 diluted earnings per share in the range of $2.35 to $2.45, as compared to its previous guidance range for fiscal 2010 of $2.20 to $2.30 and fiscal 2009 diluted earnings per share of $1.91.

Conference Call Information

A conference call to discuss first quarter results is scheduled for today, May 27, 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 June 3, 2010 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 350714.

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 May 27, 2010, the Company operates 246 retail stores (including 220 J.Crew retail stores, 9 crewcuts and 17 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 is available at the Company's website www.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, 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.


                                                               Exhibit (1)

                              J. Crew Group, Inc.
                Condensed Consolidated Statements of Operations
                                  (Unaudited)


    (In thousands, except
     percentages and per share    Three Months   Three Months
     data)                            Ended          Ended
                                  May 1, 2010    May 2, 2009
                                  -----------    -----------

    Net sales
         Stores                        $289,981       $240,726
         Direct                         114,355         95,360
                                        -------         ------
                                        404,336        336,086
    Other                                 9,543          9,684
                                          -----          -----
    Total Revenues                      413,879        345,770

    Costs of goods sold, buying
     and occupancy costs                211,281        199,833
                                        -------        -------
    Gross Profit                        202,598        145,937
         As a percent of revenues          49.0%          42.2%

    Selling, general and
     administrative expenses            127,179        110,669
         As a percent of revenues          30.7%          32.0%
                                           ----           ----
    Operating income                     75,419         35,268
         As a percent of revenues          18.2%          10.2%

    Interest expense, net                   627          1,077
                                            ---          -----

    Income before income taxes           74,792         34,191

    Provision for income taxes           30,066         13,746
                                         ------         ------

    Net income                          $44,726        $20,445
                                        =======        =======

    Income per share:
         Basic                            $0.71          $0.33
         Diluted                          $0.68          $0.32

    Weighted average shares
     outstanding:
         Basic                           63,237         62,130
         Diluted                         66,053         63,319



                                                              Exhibit (2)

                             J. Crew Group, Inc.
                    Condensed Consolidated Balance Sheets
                                 (Unaudited)


                                   May 1,   January 30,   May 2,
    (In thousands)                  2010        2010       2009
    --------------                -------  ------------  -------

    Assets
    Current assets:
       Cash and cash equivalents  $332,302      $298,107 $154,578
       Inventories                 193,081       190,231  193,923
       Prepaid expenses and other
        current assets              27,578        29,522   30,746
       Prepaid income taxes              -         1,455    9,892
                                       ---         -----    -----
    Total current assets           552,961       519,315  389,139

    Property and equipment, net    189,986       194,615  205,683

    Other assets                    24,820        24,628   20,161
                                    ------        ------   ------
    Total assets                  $767,767      $738,558 $614,983
                                  ========      ======== ========



    Liabilities and
     Stockholders' equity
    Current liabilities:
       Accounts payable           $105,354      $127,733  $97,503
       Other current liabilities    90,793       106,652   83,871
       Current portion of long-
        term debt                        -             -    1,100
       Income taxes payable         17,699             -        -
       Deferred income taxes, net      958           958    4,049
                                       ---           ---    -----
    Total current liabilities      214,804       235,343  186,523

    Long-term debt                  49,229        49,229   98,900

    Deferred credits                66,508        67,646   73,825

    Other liabilities               10,474        10,462    7,361

    Stockholders' equity           426,752       375,878  248,374
                                   -------       -------  -------
    Total liabilities and
     stockholders' equity         $767,767      $738,558 $614,983
                                  ========      ======== ========




                                                                   Exhibit (3)

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

    Fiscal 2010
                                                                     Total
                     Total stores      (Note 2)       Number of      stores
                       open at     Number of stores    stores        open at
                     beginning of   opened during   closed during   end of the
                     the quarter     the quarter     the quarter     quarter
    Quarter          ------------  ---------------- ------------- -----------
    -------
    1st Quarter
     (Actual)            321              4               0           325
    2nd Quarter
     (Projected)         325              3               1           327
    3rd Quarter
     (Projected)         327              3               0           330
    4th Quarter
     (Projected)         330              5               0           335
    ------------         ---            ---             ---           ---


                                                   Reduction of
                      Total gross   Gross square   gross square   Total gross
                         square       feet for    feet for stores    square
                        feet at    stores opened     closed or      feet at
    Fiscal 2010       beginning of  or expanded      downsized      end of
                      the quarter   during the      during the    the quarter
                                      quarter         quarter
                      -----------   -----------     -----------   -----------
    Quarter
    -------
    1st Quarter
     (Actual)          1,958,140        20,168          (615)      1,977,693
    2nd Quarter
     (Projected)       1,977,693        12,631        (7,822)      1,982,502
    3rd Quarter
     (Projected)       1,982,502         9,764             0       1,992,266
    4th Quarter
     (Projected)       1,992,266        29,595             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:
             1st Quarter - two retail and two factory stores (Actual).
             2nd Quarter -one retail, one factory and one Madewell store
             (Projected).
             3rd Quarter - two retail and one Madewell store (Projected).
             4th Quarter - three factory, one factory crewcuts and one
             Madewell stores (Projected).



SOURCE J.Crew Group, Inc.

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.