NEWS RELEASES

Back

News Release

J. Crew Reports $9 Million Increase In Operating Income For Third Quarter

December 13, 2005 at 12:00 AM EST

Contact:
James Scully
Chief Financial Officer
(212) 209-8040

Allison Malkin
Integrated Corporate Relations
(203) 682-8225

J. CREW REPORTS $9 MILLION INCREASE IN OPERATING INCOME FOR THIRD QUARTER

NEW YORK (December 13, 2005) — J. Crew Group, Inc. announced today that its operating income for the thirteen weeks ended October 29, 2005 increased by 69% or $9 million to $22 million, compared to $13 million in the comparable period last year. This increase was driven primarily by an 8% increase in revenues and higher gross margins.

Consolidated revenues for the thirteen weeks ended October 29, 2005 increased by 8% to $223 million from $206 million last year. Store sales (which consists of Retail and Factory stores) increased by 5% to $161 million. Comparable store sales increased by 3%, compared to a particularly strong 30% increase in the third quarter of 2004. Direct sales (which consists of Internet and Catalog) increased by 19% to $56 million, as compared to $47 million last year.

Gross margin in the third quarter increased to 44% from 43% last year, primarily attributable to lower markdowns in all channels.

Selling, general and administrative expenses were approximately $76 million in the third quarter of 2005 and 2004, representing 34% of revenues in 2005 and 37% in 2004.

Net income for the third quarter increased to $3 million, compared to a $10 million loss in the prior year. This increase resulted from the $9 million increase in operating income and a $4 million decrease in interest expense as a result of the debt refinancing in the fourth quarter of 2004.

Consolidated revenues for the thirty-nine weeks ended October 29, 2005 were $663 million compared to $541 million last year, a 23% increase. Store sales increased 18% to $469 million from $397 million last year; comparable store sales increased 16%. Direct sales increased 37% to $174 million.

Gross margin for the thirty-nine weeks ended October 29, 2005 increased to 44% compared to 41% in the comparable period last year, due to lower markdowns across all channels and a decrease in buying and occupancy costs as a percentage of revenues. Selling, general and administrative expenses increased to $226 million from $205 million last year, but decreased as a percentage of revenues to 34% from 38%.

Operating income for the thirty-nine week period was $65 million compared to $19 million last year, an improvement of $46 million while net income was $10 million, compared to a loss of $47 million last year.

There were no outstanding borrowings under the Company's working capital facility during the first nine months of 2004 or 2005.

Third Quarter Conference Call
The Company will not hold a conference call regarding third quarter results.

J.Crew Group, Inc. is a fully integrated multi-channel specialty retailer of women's and men's apparel and accessories. J.Crew products are distributed through the Company's 158 retail and 45 factory stores, the J.Crew catalog, and the Company's Internet website at www.jcrew.com.

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.