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News Release

J.Crew Group, Inc. Announces Fourth Quarter and Fiscal 2009 Results

  • Fourth Quarter Revenues Rise 19% to $460.6 million
  • Fourth Quarter Diluted EPS of $0.61
  • Fiscal 2009 Diluted EPS of $1.91

NEW YORK, March 9, 2010 /PRNewswire via COMTEX/ -- J.Crew Group, Inc. (NYSE: JCG) today announced financial results for the three months (fourth quarter) and fiscal year ended January 30, 2010 (fiscal 2009).

Fourth Quarter highlights:

  • Revenues increased 19% to $460.6 million. Store sales increased 23% to $311.1 million, with comparable store sales increasing 17%. Comparable store sales decreased 13% in the fourth quarter of fiscal 2008. Direct sales (Internet and Phone) increased 13% to $139.2 million. Direct sales decreased 2% to $123.0 million in the fourth quarter of fiscal 2008.
  • Gross margin increased to 43.9% of revenues from 27.6% of revenues in the fourth quarter of fiscal 2008. The increase in gross margin is primarily due to decreased markdowns and promotional selling in the fourth quarter of 2009 compared to 2008.
  • Operating income increased to $68.6 million, or 14.9% of revenues, compared with an operating loss of $20.4 million, or 5.3% of revenues, in the fourth quarter of fiscal 2008.
  • Net income in the fourth quarter of fiscal 2009 was $40.4 million, or $0.61 per diluted share. Net loss was $13.5 million, or $0.22 per diluted share, in the fourth quarter of fiscal 2008.

Millard Drexler, J.Crew's Chairman and CEO stated: "We are extremely pleased with all we achieved in 2009. Our bar has been set high and it is our continued mission to be creative, to be innovative, and to emotionally connect with our customers."

Fiscal 2009 highlights:

  • Revenues increased 11% to $1,578.0 million. Store sales increased 14% to $1,110.9 million, with comparable store sales increasing 4%. Comparable store sales decreased 4% in fiscal 2008. Direct sales increased 5% to $428.2 million. Direct sales increased 8% to $408.9 million in fiscal 2008.
  • Gross margin increased to 44.1% of revenues from 38.9% of revenues in fiscal 2008.
  • Operating income increased to $211.3 million, or 13.4% of revenues, compared to $96.7 million, or 6.8% of revenues, in fiscal 2008.
  • Net income for fiscal 2009 was $123.4 million, or $1.91 per diluted share. Net income was $54.1 million, or $0.85 per diluted share, in fiscal 2008.

Balance Sheet highlights as of January 30, 2010:

  • Cash and cash equivalents were $298.1 million at the end of the fourth quarter and after a voluntary principal payment of debt of $50 million made during fiscal 2009. Cash and cash equivalents were $146.4 million at the end of fiscal 2008.
  • Inventories at the end of the fourth quarter were $190.2 million, compared to $187.0 million at the end of the fourth quarter of fiscal 2008. Inventory per square foot at the end of fiscal 2009 decreased 3%, compared to the end of fiscal 2008.

Guidance

The Company currently expects first quarter fiscal 2010 diluted earnings per share in the range of $0.48 to $0.53 and fiscal 2010 diluted earnings per share in the range of $2.20 to $2.30.

Conference Call Information

A conference call to discuss fourth quarter results is scheduled for today, March 9, 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 http://www.jcrew.com/. A replay of this call will be available until March 16, 2010 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number 345777.

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 March 9, 2010, the Company operates 244 retail stores (including 218 J.Crew retail stores, 9 Crewcuts and 17 Madewell stores), the J.Crew catalog business, jcrew.com, and 79 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company's website http://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, 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.

                                                              Exhibit (1)

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

    (In thousands,   Three       Three          Fiscal       Fiscal
     except          Months      Months         Year         Year
     percentages     Ended       Ended          Ended        Ended
     and per share   January     January        January      January
     amounts)        30, 2010    31, 2009       30, 2010     31, 2009

    Net sales
      Stores         $311,061    $252,026     $1,110,932     $974,284
      Direct          139,174     122,957        428,186      408,916
                      450,235     374,983      1,539,118    1,383,200
    Other              10,374      13,054         38,924       44,770
    Total Revenues    460,609     388,037      1,578,042    1,427,970

    Costs of goods
     sold, buying
     and occupancy
     costs            258,542     281,101        882,385      872,547
    Gross Profit      202,067     106,936        695,657      555,423
      As a
      percent
      of revenues        43.9%       27.6%          44.1%        38.9%

    Selling,
     general and
     administrative
     expenses         133,471     127,378        484,396      458,738
      As a
      percent
      of revenues        29.0%       32.8%          30.7%        32.1%
    Operating income
     (loss)            68,596     (20,442)       211,261       96,685
      As a
      percent
      of revenues        14.9%       (5.3%)         13.4%         6.8%

    Interest expense,
     net                2,177       1,570          5,384        5,940

    Income (loss)
     before income
     taxes             66,419     (22,012)       205,877       90,745

    Provision
     (benefit)
     for income
     taxes             25,983      (8,463)        82,517       36,628

    Net income
     (loss)           $40,436    $(13,549)      $123,360      $54,117

    Income (loss)
     per share:
      Basic             $0.64      ($0.22)         $1.97        $0.88
      Diluted           $0.61      ($0.22)         $1.91        $0.85

    Weighted average
     shares
     outstanding:
      Basic            63,085      61,991         62,583       61,687
      Diluted          65,882      61,991         64,714       64,027



                                                              Exhibit (2)

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

                                        January 30,   January 31,
    (In thousands)                          2010          2009

    Assets
    Current assets:
       Cash and cash equivalents         $298,107      $146,430
       Inventories                        190,231       187,044
       Prepaid expenses and other
        current assets                     29,522        34,926
       Prepaid income taxes                 1,455        23,116
    Total current assets                  519,315       391,516

    Property and equipment, net           194,615       201,675

    Deferred income taxes, net             14,851         8,862

    Other assets                            9,777        11,756
    Total assets                         $738,558      $613,809


    Liabilities and Stockholders'
     equity
    Current liabilities:
       Accounts payable                  $127,733      $119,719
       Other current liabilities          106,652        83,889
       Deferred income taxes, net             958         4,049
       Current portion of long-term
        debt                                    -           800
    Total current liabilities             235,343       208,457

    Long-term debt                         49,229        99,200

    Deferred credits                       67,646        73,815

    Other liabilities                      10,462         7,388

    Stockholders' equity                  375,878       224,949
    Total liabilities and
     stockholders' equity                $738,558      $613,809


                                                              (Exhibit 3)


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

    Actual Fiscal 2009

                   Total stores    Number of      Number of      Total stores
                   open at         stores         stores closed  open at end
                   beginning       opened during  during         of the
    Quarter        of the quarter  the quarter    the quarter    quarter
    1st Quarter        300            12             2               310
    2nd Quarter        310             9             0               319
    3rd Quarter        319             2             1               320
    4th Quarter        320             1             0               321


    Actual Fiscal 2009

                                                   Reduction of
                                                   gross square
                                  Gross square     feet for
                  Total gross     feet for stores  stores closed  Total gross
                  square feet     opened or        or downsized   square feet
                  at beginning    expanded during  during the     at end of
    Quarter       of the quarter  the quarter      quarter        the quarter
    1st Quarter     1,864,133       52,185          (8,258)        1,908,060
    2nd Quarter     1,908,060       38,166               0         1,946,226
    3rd Quarter     1,946,226       10,274          (2,872)        1,953,628
    4th Quarter     1,953,628        4,512               0         1,958,140


    Projected Fiscal 2010

                                    (Note 2)
                   Total stores    Number of      Number of      Total stores
                   open at         stores         stores closed  open at end
                   beginning       opened during  during         of the
    Quarter        of the quarter  the quarter    the quarter    quarter
    1st Quarter       321              5              0             326
    2nd Quarter       326              2              1             327
    3rd Quarter       327              4              0             331
    4th Quarter       331              4              0             335


    Projected Fiscal 2010

                                                   Reduction of
                                                   gross square
                                  Gross square     feet for
                  Total gross     feet for stores  stores closed  Total gross
                  square feet     opened or        or downsized   square feet
                  at beginning    expanded during  during the     at end of
    Quarter       of the quarter  the quarter      quarter        the quarter
    1st Quarter     1,958,140       25,168           (615)         1,982,693
    2nd Quarter     1,982,693        7,631         (7,822)         1,982,502
    3rd Quarter     1,982,502       13,249              0          1,995,751
    4th Quarter     1,995,751       24,605              0          2,020,356



    Note 1 - Store count and square footage summary excludes three clearance
             store locations.

    Note 2 - Projected number of stores opened during Fiscal 2010 by quarter:
             1st Quarter - two retail and three factory stores.
             2nd Quarter - one retail and one Madewell store.
             3rd Quarter - two retail and two Madewell stores.
             4th Quarter - one retail, two factory and one Madewell store.



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.