<PAGE>

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

          [ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended      May 4, 2002

IRS Employer            Exact name of Registrant, State of Incorporation;
Identification No.      Address of Principal Executive Offices; and Telephone
                        Number

22-2894486                   J. CREW GROUP, Inc.
                            (A New York corporation)
                                  770 Broadway
                            New York, New York 10003
                                 (212) 209-2500

22-3540930                   J. CREW OPERATING CORP.
                            (A Delaware corporation)
                                  770 Broadway
                            New York, New York 10003
                                 (212) 209-2500

Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports) and (2) have been subject to
such filing requirements for the past 90 days. Yes x   No __
                                                  ---

The number of shares of Common Stock outstanding of each of the issuers as of
May 17, 2002

         J. CREW GROUP, INC.
                  11,748,789 shares of Common Stock, par value $.01 per share

         J. CREW OPERATING CORP.
                  100 shares of Common Stock, par value $.01 per share (all of
                  which are owned beneficially and of record by J.Crew Group,
                  Inc.)

This combined Form 10-Q is separately filed by each of J. Crew Group, Inc and J.
Crew Operating Corp. The information contained herein relating to each
individual registrant is filed by such registrant on its own behalf. No
registrant makes any representation as to information relating to any other
registrant.

J. Crew Operating Corp. meets the conditions set forth in General Instruction H
(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced
disclosure format.

<PAGE>

                         Part I - Financial Information

Item I. Financial Statements

                             J. CREW GROUP, INC. AND
                                  SUBSIDIARIES

                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                  May 4,                 February 2,
                                 Assets                                            2002                     2002
                                 ------                                            ----                     ----
                                                                                (unaudited)
                                                                                            (in thousands)
<S>                                                                             <C>                       <C>
Current assets:
     Cash and cash equivalents                                                  $   15,306                $   16,201
     Merchandise inventories                                                       143,405                   138,918
     Prepaid expenses and other current assets                                      24,968                    27,026
                                                                                -----------               -----------

           Total current assets                                                    183,679                   182,145

Property and equipment - at cost                                                   302,992                   293,700
                  Less accumulated depreciation and amortization                  (114,289)                 (106,427)
                                                                                -----------               -----------
                                                                                   188,703                   187,273
                                                                                ----------                -----------

Deferred income tax assets                                                          18,071                    18,071
Other assets                                                                        14,304                    13,831
                                                                                -----------               -----------
            Total assets                                                        $  404,757                $  401,320
                                                                                ===========               ===========

                                 Liabilities and Stockholders' Deficit
                                 -------------------------------------

Current liabilities:
     Notes payable - bank                                                       $   55,000                $       --
     Accounts payable and other current liabilities                                 91,285                   128,491
     Federal and state income taxes                                                  1,945                     8,840
     Deferred income tax liabilities                                                 5,650                     5,650
                                                                                -----------               -----------

           Total current liabilities                                               153,880                   142,981
                                                                                -----------               -----------

Deferred credits and other long-term liabilities                                    67,416                    67,235
                                                                                -----------               -----------

Long-term debt                                                                     283,954                   279,687
                                                                                -----------               -----------

Redeemable preferred stock                                                         238,816                   230,460
                                                                                -----------               -----------

Stockholders' deficit                                                             (339,309)                 (319,043)
                                                                                -----------               -----------

           Total liabilities and stockholders' deficit                          $  404,757                $  401,320
                                                                                ===========               ===========
</TABLE>

See notes to unaudited condensed consolidated financial statements.

                                       2

<PAGE>

                             J. CREW GROUP, INC. AND
                                  SUBSIDIARIES

                 Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                           Thirteen weeks ended
                                                                     May 4,                    May 5,
                                                                     -----                     -----
                                                                      2002                      2001
                                                                      ----                      ----
                                                                                  (unaudited)
                                                                                (in thousands)
<S>                                                                 <C>                        <C>
Revenues:

    Net sales                                                       $157,883                   $158,963
    Other                                                              9,169                      8,883
                                                                    --------                   --------
                                                                     167,052                    167,846
                                                                    --------                   --------

Cost of goods sold including buying and occupancy costs              100,087                     99,590

Selling, general and administrative expenses                          75,947                     75,485
                                                                    --------                   --------

                   Loss from operations                               (8,982)                    (7,229)

Interest expense - net                                                (9,593)                    (8,451)
                                                                    --------                   --------

                   Loss before income taxes                          (18,575)                   (15,680)

Income tax benefit                                                     6,500                      6,340
                                                                    --------                   --------

                   Net loss                                         $(12,075)                  $ (9,340)
                                                                    ========                   ========
</TABLE>




See notes to unaudited condensed consolidated financial statements.

                                       3

<PAGE>

                             J. CREW GROUP, INC. AND
                                  SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                               Thirteen weeks ended
                                                                              May 4,          May 5,
                                                                              ------          ------
                                                                               2002            2001
                                                                               ----            ----
                                                                                    (unaudited)
                                                                                  (in thousands)
<S>                                                                      <C>              <C>
CASH FLOW FROM OPERATING ACTIVITIES:

Net loss                                                                 $   (12,075)     $  (9,340)

Adjustments to reconcile net loss to net cash used in
 operating activities:
     Depreciation and amortization                                             8,224          6,651
     Amortization of deferred financing costs                                    793            500
     Non cash compensation expense                                               305            728
     Non cash interest expense                                                 4,267          3,639

Changes in operating assets and liabilities:

     Merchandise inventories                                                  (4,487)        (7,411)
     Prepaid expenses and other current assets                                 2,058          3,342
     Other assets                                                             (1,307)        (1,002)
     Accounts payable and other liabilities                                  (36,901)       (28,200)
     Federal and state income taxes                                           (6,895)       (12,743)
                                                                          -----------      ---------

     Net cash used in operating activities                                   (46,018)       (43,836)
                                                                          -----------      ---------

CASH FLOW FROM INVESTING ACTIVITIES:

     Capital expenditures                                                    (12,067)       (15,019)
     Proceeds from construction allowances                                     2,190          4,315
                                                                          -----------      ---------

     Net cash used in investing activities                                    (9,877)       (10,704)
                                                                          -----------      =========

CASH FLOW FROM FINANCING ACTIVITIES:

     Increase in notes payable, bank                                          55,000         37,000
                                                                          ===========      =========

DECREASE IN CASH AND CASH EQUIVALENTS                                           (895)       (17,540)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                               16,201         32,930
                                                                          -----------      ---------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                $    15,306      $  15,390
                                                                          ===========      =========

NON-CASH FINANCING ACTIVITIES:

     Dividends on preferred stock                                        $     8,356      $   7,234
                                                                          ===========      =========
</TABLE>

See notes to unaudited condensed consolidated financial statements.

                                       4

<PAGE>

                       J.CREW GROUP, INC. AND SUBSIDIARIES

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                Thirteen weeks ended May 4, 2002 and May 5, 2001

1.   Basis of Presentation

         The accompanying unaudited condensed consolidated financial statements
         include the accounts of J. Crew Group, Inc. and its wholly-owned
         subsidiaries (collectively, the "Company"). All significant
         intercompany balances and transactions have been eliminated in
         consolidation.

         The condensed consolidated balance sheet as of May 4, 2002 and the
         condensed consolidated statements of operations and cash flows for the
         thirteen week periods ended May 4, 2002 and May 5, 2001 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 of the Company, the results of its operations and cash flows
         have been made.

         Certain information and footnote disclosure normally included in
         financial statements prepared in accordance with accounting principles
         generally accepted in the United States of America have been condensed
         or omitted. These financial statements should be read in conjunction
         with the financial statements and notes thereto included in the
         Company's consolidated financial statements for the fiscal year ended
         February 2, 2002.

         The results of operations for the thirteen week period ended May 4,
         2002 are not necessarily indicative of the operating results for the
         full fiscal year.

2.   Staff Reductions

         During the first quarter of 2002 the Company recorded a pretax charge
         of $4.6 million related to severance costs for approximately 120
         employees and the departure of the former Chief Executive Officer. The
         staff reductions occurred in the first quarter and the related payments
         will be incurred primarily in the second quarter of fiscal 2002.

3.   Recent Accounting Pronouncements

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
         Retirement Obligations". SFAS No. 143 requires the Company to record
         the fair value of an asset retirement obligation as a liability in the
         period in which it incurs a legal obligation associated with the
         retirement of tangible long-lived assets. The Company also records a
         corresponding asset which is depreciated over the life of the asset.
         Subsequent to the initial measurement of the asset retirement
         obligation, the obligation will be adjusted at the end of each period
         to reflect the passage of time and changes in the estimated future cash
         flows underlying the obligation. SFAS No. 143 is effective for fiscal
         years beginning after June 15, 2002. Management does not believe that
         the adoption of SFAS No. 143 will have a significant impact on the
         Company's financial statements.

         In July 2001, the FASB issued Statement of Financial Standards No. 141,
         "Business Combinations" and Statement of Financial Accounting Standards
         No. 142, "Goodwill and Other Intangible Assets". SFAS 141 eliminates
         the pooling-of-interests method of accounting for business combinations
         initiated after June 30, 2001 and modifies the application of the
         purchase accounting method effective for transactions that are
         completed after June 30, 2001. SFAS 142 eliminated the requirement to
         amortize goodwill and intangible assets having indefinite useful lives
         but requires testing at least annually for impairment. Intangible
         assets that have finite lives will continue to be amortized over their
         useful lives. SFAS 142 applies to goodwill and intangible assets
         arising from transactions completed before and after the Statement's
         effective date of

                                       5

<PAGE>

         January 1, 2002. The adoption of these statements in fiscal 2002 did
         not have any effect on the Company's financial statements.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses
         financial accounting and reporting for the impairment of disposal of
         long-lived assets and requires companies to separately report
         discontinued operations and extends that reporting to a component of an
         entity that either has been disposed of or is classified as held for
         sale. This Statement requires that long-lived assets be reviewed for
         impairment whenever events or changes in circumstances indicate that
         the carrying amount of an asset may not be recoverable. SFAS No. 144 is
         effective for fiscal years beginning after December 15, 2001. The
         adoption of SFAS No. 144 did not have a significant effect on the
         Company's financial statements in the first quarter of fiscal 2002.

         EITF Issue No. 01-9 "Accounting for Consideration Given to a Customer
         or a Reseller of the Vendor's Products" (formerly EITF Issue 00-14) was
         effective in the first quarter of fiscal year 2002. This EITF addresses
         the accounting for and classification of consideration given to a
         customer from a vendor in connection with the purchase or promotion of
         the vendor's product. The adoption of this EITF did not have any effect
         on the Company's financial statements.

                                       6

<PAGE>

                           J. CREW OPERATING CORP. AND
                                  SUBSIDIARIES

                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                   May 4,             February 2,
                                 Assets                                             2002                 2002
                                 ------                                             ----                 ----
                                                                                (unaudited)
                                                                                         (in thousands)
<S>                                                                             <C>                   <C>
Current assets:
     Cash and cash equivalents                                                  $   15,306            $  16,201
     Merchandise inventories                                                       143,405              138,918
     Prepaid expenses and other current assets                                      24,968               27,026
                                                                                -----------           ----------

           Total current assets                                                    183,679              182,145

Property and equipment - at cost                                                   302,992              293,700
                  Less accumulated depreciation and amortization                  (114,289)            (106,427)
                                                                                -----------           ----------
                                                                                   188,703              187,273
                                                                                -----------           ----------

Other assets                                                                        12,839               12,310
                                                                                -----------           ---------
            Total assets                                                        $  385,221            $ 381,728
                                                                                ===========           =========

                      Liabilities and Stockholder's Equity
                      ------------------------------------


Current liabilities:
     Notes payable - bank                                                       $   55,000            $      --
     Accounts payable and other current liabilities                                 91,285              128,491
     Federal and state income taxes                                                  4,814               10,109
     Deferred income tax liabilities                                                 5,604                5,604
                                                                                -----------           ----------

           Total current liabilities                                               156,703              144,204
                                                                                -----------           ----------

Deferred credits and other long-term liabilities                                    67,416               67,235
                                                                                -----------           ----------

Long-term debt                                                                     150,000              150,000
                                                                                -----------           ----------

Due to J.Crew Group, Inc.                                                            1,142                1,142
                                                                                -----------           ----------

Stockholder's equity                                                                 9,960               19,147
                                                                                -----------           ----------


           Total liabilities and stockholder's equity                           $  385,221            $ 381,728
                                                                                ===========           ==========
</TABLE>


See notes to unaudited condensed consolidated financial statements.

                                       7

<PAGE>

                           J. CREW OPERATING CORP. AND
                                  SUBSIDIARIES

                 Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                            Thirteen weeks ended
                                                                      May 4,                     May 5,
                                                                      ------                     ------
                                                                       2002                       2001
                                                                       ----                       ----
                                                                                 (unaudited)
                                                                                (in thousands)
<S>                                                                 <C>                       <C>
Revenues:

    Net sales                                                       $ 157,883                 $ 158,963
    Other                                                               9,169                     8,883
                                                                    ---------                 ---------
                                                                      167,052                   167,846

Cost of goods sold including buying and occupancy costs               100,087                    99,590

Selling, general and administrative expenses                           75,782                    75,320
                                                                    ---------                 ---------

                   Loss from operations                                (8,817)                   (7,064)

Interest expense - net                                                 (5,270)                   (4,755)
                                                                    ---------                 ---------

                   Loss before income taxes                           (14,087)                  (11,819)

Income tax benefit                                                      4,900                     4,750
                                                                    ---------                 ---------

                   Net loss                                         $  (9,187)                $  (7,069)
                                                                    =========                 =========
</TABLE>

See notes to unaudited condensed consolidated financial statements.

                                       8

<PAGE>

                           J. CREW OPERATING CORP. AND
                                  SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                      Thirteen weeks ended
                                                                                      May 4,          May 5,
                                                                                      ------          ------
                                                                                       2002            2001
                                                                                       ----            ----
                                                                                           (unaudited)
                                                                                          (in thousands)
<S>                                                                                 <C>             <C>
CASH FLOW FROM OPERATING ACTIVITIES:

Net loss                                                                            $ (9,187)       $ (7,069)

Adjustments to reconcile net loss to net cash used in operating activities:

     Depreciation and amortization                                                     8,224           6,651
     Amortization of deferred financing costs                                            737             443
     Non cash compensation expense                                                       140             563

Changes in operating assets and liabilities:

     Merchandise inventories                                                          (4,487)         (7,411)
     Prepaid expenses and other current assets                                         2,058           3,342
     Other assets                                                                     (1,307)         (1,002)
     Accounts payable and other liabilities                                          (36,901)        (28,200)
     Federal and state income taxes                                                   (5,295)        (11,153)
                                                                                    --------        --------

     Net cash used in operating activities                                           (46,018)        (43,836)
                                                                                    --------        --------

CASH FLOW FROM INVESTING ACTIVITIES:

     Capital expenditures                                                            (12,067)        (15,019)
     Proceeds from construction allowances                                             2,190           4,315
                                                                                    --------        --------

     Net cash used in investing activities                                            (9,877)        (10,704)
                                                                                    --------        --------

CASH FLOW FROM FINANCING ACTIVITIES:

     Increase in notes payable, bank                                                  55,000          37,000
                                                                                    --------        --------

DECREASE IN CASH AND CASH EQUIVALENTS                                                   (895)        (17,540)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                       16,201          32,930
                                                                                    --------        --------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                           $ 15,306        $ 15,390
                                                                                    ========        ========
</TABLE>

See notes to unaudited condensed consolidated financial statements.

                                       9

<PAGE>

                     J.CREW OPERATING CORP. AND SUBSIDIARIES

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                Thirteen Weeks Ended May 4, 2002 and May 5, 2001

1.   Basis of Presentation

         The accompanying unaudited condensed consolidated financial statements
         include the accounts of J. Crew Operating Corp. and its wholly-owned
         subsidiaries (collectively, the "Company"). All significant
         intercompany balances and transactions have been eliminated in
         consolidation.

         The condensed consolidated balance sheet as of May 4, 2002 and the
         condensed consolidated statements of operations and cash flows for the
         thirteen week periods ended May 4, 2002 and May 5, 2001 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 of the Company, the results of its operations and cash flows
         have been made.

         Certain information and footnote disclosure normally included in
         financial statements prepared in accordance with accounting principles
         generally accepted in the United States of America have been condensed
         or omitted. These financial statements should be read in conjunction
         with the financial statements and notes thereto included in the
         Company's consolidated financial statements for the fiscal year ended
         February 2, 2002.

         The results of operations for the thirteen week period ended May 4,
         2002 are not necessarily indicative of the operating results for the
         full fiscal year.

2.   Staff Reductions

         During the first quarter of 2002 the Company recorded a pretax charge
         of $4.6 million related to severance costs for approximately 120
         employees and the departure of the former Chief Executive Officer. The
         staff reductions occurred in the first quarter and the related payments
         will be incurred primarily in the second quarter of fiscal 2002.

3.   Recent Accounting Pronouncements

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
         Retirement Obligations". SFAS No. 143 requires the Company to record
         the fair value of an asset retirement obligation as a liability in the
         period in which it incurs a legal obligation associated with the
         retirement of tangible long-lived assets. The Company also records a
         corresponding asset which is depreciated over the life of the asset.
         Subsequent to the initial measurement of the asset retirement
         obligation, the obligation will be adjusted at the end of each period
         to reflect the passage of time and changes in the estimated future cash
         flows underlying the obligation. SFAS No. 143 is effective for fiscal
         years beginning after June 15, 2002. Management does not believe that
         the adoption of SFAS No. 143 will have a significant impact on the
         Company's financial statements.

         In July 2001, the FASB issued Statement of Financial Standards No. 141,
         "Business Combinations" and Statement of Financial Accounting Standards
         No. 142, "Goodwill and Other Intangible Assets". SFAS 141 eliminates
         the pooling-of-interests method of accounting for business combinations
         initiated after June 30, 2001 and modifies the application of the
         purchase accounting method effective for transactions that are
         completed after June 30, 2001. SFAS 142 eliminated the requirement to
         amortize goodwill and intangible assets having indefinite useful lives
         but requires testing at least annually for impairment. Intangible
         assets that have finite lives will continue to be amortized over their
         useful lives. SFAS 142 applies to goodwill and intangible assets
         arising from transactions completed before and after the Statement's
         effective date of

                                       10

<PAGE>

         January 1, 2002. The adoption of these statements in fiscal 2002 did
         not have any effect on the Company's financial statements.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses
         financial accounting and reporting for the impairment of disposal of
         long-lived assets and requires companies to separately report
         discontinued operations and extends that reporting to a component of an
         entity that either has been disposed of or is classified as held for
         sale. This Statement requires that long-lived assets be reviewed for
         impairment whenever events or changes in circumstances indicate that
         the carrying amount of an asset may not be recoverable. SFAS No. 144 is
         effective for fiscal years beginning after December 15, 2001. The
         adoption of SFAS No. 144 did not have a significant effect on the
         Company's financial statements in the first quarter of fiscal 2002.

         EITF Issue No. 01-9 "Accounting for Consideration Given to a Customer
         or a Reseller of the Vendor's Products" (formerly EITF Issue 00-14) was
         effective in the first quarter of fiscal year 2002. This EITF addresses
         the accounting for and classification of consideration given to a
         customer from a vendor in connection with the purchase or promotion of
         the vendor's product. The adoption of this EITF did not have any effect
         on the Company's financial statements.

                                       11

<PAGE>

Forward-looking statements

Certain statements in this Report on Form 10-Q constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. We may also make written or oral forward-looking statements in our
periodic reports to the Securities and Exchange Commission on Forms 10-K, 10-Q,
8-K, etc., in press releases and other written materials and in oral statements
made by our officers, directors or employees to third parties. Statements that
are not historical facts, including statements about our beliefs and
expectations, are forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other important factors that
could cause the actual results, performance or achievements of the Company, or
industry results, to differ materially from historical results, any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such risks and uncertainties include, but are not
limited to, competitive pressures in the apparel industry, changes in levels of
consumer spending or preferences in apparel and acceptance by customers of the
Company's products, overall economic conditions, governmental regulations and
trade restrictions, acts of war or terrorism in the United States or worldwide,
political or financial instability in the countries where the Company's goods
are manufactured, postal rate increases, paper and printing costs, availability
of suitable store locations at appropriate terms, the level of the Company's
indebtedness and exposure to interest rate fluctuations, and other risks and
uncertainties described in this report and the Company's other reports and
documents filed or which may be filed, from time to time, with the Securities
and Exchange Commission. These statements are based on current plans, estimates
and projections, and therefore, you should not place undue reliance on them.
Forward-looking statements speak only as of the date they are made and we
undertake no obligation to update publicly any of them in light of new
information or future events.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS - J.CREW GROUP, INC.

RESULTS OF OPERATIONS - THIRTEEN WEEKS ENDED MAY 4, 2002 COMPARED TO THIRTEEN
WEEKS ENDED MAY 5, 2001.

Revenues for the thirteen weeks ended May 4, 2002 decreased to $167.1 million
from $167.8 million in the thirteen weeks ended May 5, 2001.

Revenues of J.Crew Retail increased from $84.8 million in the first quarter of
2001 to $85.7 million in the first quarter of 2002. This increase was due to the
sales from stores opened for less than a full year. Comparable store sales in
the first quarter of 2002 decreased by 13.0%. The number of stores open at May
4, 2002 increased to 143 from 112 at May 5, 2001.

Revenues of J.Crew Direct increased from $55.7 million in the first quarter of
2001 to $56.2 million in the first quarter of 2002. Revenues from jcrew.com
(which are included in J.Crew Direct revenues) increased to $31.2 million in the
first quarter of 2002 from $25.3 million in the first quarter of 2001. Catalog
revenues in the first quarter of 2002 decreased to $25.0 million from $30.4
million in the first quarter of 2001, as the Company continues to migrate
customers to the Internet.

Revenues of J.Crew Factory decreased from $18.4 million in the first quarter of
2001 to $16.0 million in the first quarter of 2002. There were 41 stores open
during both periods.

Other revenues, which consist of shipping and handling fees and royalties, were
$9.2 million in the first quarter of 2002 and $8.9 million in the first quarter
of 2001.

Cost of goods sold, including buying and occupancy costs, increased as a
percentage of revenues from 59.3% in the first quarter of 2001 to 59.9% in the
first quarter of 2002. This increase is attributable primarily to an increase in
buying and occupancy costs as a percentage of revenue in the first quarter of
2002 compared to the first quarter of 2001 of 180 basis points resulting from
negative leverage due to the

                                       12

<PAGE>

decline in comparable store sales. This increase was partially offset by an
increase of 120 basis points in merchandise margin due primarily to a higher
initial markup in the first quarter of 2002.

Selling, general and administrative expenses increased to $75.9 million in the
thirteen weeks ended May 4, 2002 from $75.5 million in the thirteen weeks ended
May 5, 2001. This increase of $.4 million was attributed to an increase in
general and administrative expenses of $5.0 million and a decrease of $4.6
million in selling expense. The increase in general and administrative expenses
resulted from additional retail stores in operation during the first quarter of
2002 and $4.6 million of severance charges relating to headcount reductions and
the departure of the former Chief Executive Officer. These increases were
somewhat offset by cost reduction initiatives implemented in fiscal 2001. The
reduction in selling expense was due to a shift in the timing of catalog
circulation between the first quarter and subsequent quarters in fiscal 2002,
the mailing of several test editions in the first quarter of 2001, and a
decrease in printing and paper costs. As a percentage of revenues, selling,
general and administrative expenses increased to 45.5% in the first quarter of
2002 from 45.0% of revenues in the first quarter of 2001.

The increase in interest expense from $8.5 million in the first quarter of 2001
to $9.6 million in the first quarter of 2002 resulted primarily from increases
in non-cash interest. Non-cash interest expense increased to $5.1 million in the
first quarter of 2002 from $4.1 million in the first quarter of 2001. Non-cash
interest will convert to cash pay effective October 15, 2002 with the first
payment of $9.3 million due in April 2003. Average borrowings under revolving
credit arrangements were $35.6 million in the first quarter of 2002 compared to
$10.5 million in the first quarter of 2001.

The effective income tax benefit decreased to (35.0%) in the first quarter of
2002 from (40.4%) in the first quarter of 2001 due to a decrease in assumed
state tax benefits.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows used in operations increased from $43.8 million in the first quarter
of 2001 to $46.0 million in the first quarter of 2002. This increase in cash
used in operations resulted primarily from the increase in working capital
requirements in the first quarter 2002 compared to the first quarter of 2001.

Capital expenditures, net of construction allowances, were $9.9 million for the
first quarter of 2002 compared to $10.7 million in the first quarter of 2001.
Capital expenditures in the first quarter of 2002 were incurred for the
construction of new stores. In the first quarter of 2001, capital expenditures
were incurred for the construction of new stores and system enhancements.
Capital expenditures for fiscal year 2002 are expected to be approximately $20
million compared to $42.6 million in fiscal year 2001.

Borrowings under the revolving credit line were $55.0 million at May 4, 2002
compared to $37.0 million at May 5, 2001. The increase in borrowings was due
primarily to the lower level of invested cash at the beginning of fiscal year
2002 compared to last year.

Management believes that cash flow from operations and availability under the
revolving credit facility will provide adequate funds for the Company's
foreseeable working capital needs, planned capital expenditures and debt service
obligations. The Company's ability to fund its operations and make planned
capital expenditures, to make scheduled debt payments, to refinance indebtedness
and to remain in compliance with all of the financial covenants under its debt
agreements depends on its future operating performance and cash flow, which in
turn, are subject to prevailing economic conditions and to financial, business
and other factors, some of which are beyond its control.

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<PAGE>

SEASONALITY

The Company experiences two distinct selling seasons, spring and fall. The
spring season is comprised of the first and second quarters and the fall season
is comprised of the third and fourth quarters. Net sales are usually
substantially higher in the fall season and selling, general and administrative
expenses as a percentage of net sales are usually higher in the spring season.
Approximately 35% of annual net sales in fiscal year 2001 occurred in the fourth
quarter. The Company's working capital requirements also fluctuate throughout
the year, increasing substantially in September and October in anticipation of
the holiday season inventory requirements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS - J.CREW OPERATING CORP.

RESULTS OF OPERATIONS - THIRTEEN WEEKS ENDED MAY 4, 2002 COMPARED TO THIRTEEN
WEEKS ENDED MAY 5, 2001.

Revenues for the thirteen weeks ended May 4, 2002 decreased to $167.1 million
from $167.8 million in the thirteen weeks ended May 5, 2001.

Revenues of J.Crew Retail increased from $84.8 million in the first quarter of
2001 to $85.7 million in the first quarter of 2002. This increase was due to the
sales from stores opened for less than a full year. Comparable store sales in
the first quarter of 2002 decreased by 13.0%. The number of stores open at May
4, 2002 increased to 143 from 112 at May 5, 2001.

Revenues of J.Crew Direct increased from $55.7 million in the first quarter of
2001 to $56.2 million in the first quarter of 2002. Revenues from jcrew.com
(which are included in J.Crew Direct revenues) increased to $31.2 million in the
first quarter of 2002 from $25.3 million in the first quarter of 2001. Catalog
revenues in the first quarter of 2002 decreased to $25.0 million from $30.4
million in the first quarter of 2001, as the Company continues to migrate
customers to the Internet.

Revenues of J.Crew Factory decreased from $18.4 million in the first quarter of
2001 to $16.0 million in the first quarter of 2002. There were 41 stores open
during both periods.

Other revenues, which consist of shipping and handling fees and royalties, were
$9.2 million in the first quarter of 2002 and $8.9 in the first quarter of 2001.

Cost of goods sold, including buying and occupancy costs, increased as a
percentage of revenues from 59.3% in the first quarter of 2001 to 59.9% in the
first quarter of 2002. This increase is attributable primarily to an increase in
buying and occupancy costs as a percentage of revenue in the first quarter of
2002 compared to the first quarter of 2001 of 180 basis points resulting from
negative leverage due to the decline in comparable store sales. This increase
was partially offset by an increase of 120 basis points in merchandise margin
due primarily to a higher initial markup in the first quarter of 2002.

Selling, general and administrative expenses increased to $75.8 million in the
thirteen weeks ended May 4, 2002 from $75.3 million in the thirteen weeks ended
May 5, 2001. This increase of $.5 million was attributed to an increase in
general and administrative expenses of $5.1 million, and a decrease of $4.6
million in selling expense. The increase in general and administrative expenses
resulted from additional retail stores in operation during the first quarter of
2002 and $4.6 million of severance charges relating to headcount reductions and
the departure of the former Chief Executive Officer. These increases were
somewhat offset by the cost reduction initiatives implemented in fiscal 2001.
The reduction in selling expense was due primarily to a shift in the timing of
catalog circulation between the first quarter and subsequent quarters in fiscal
2002, the mailing of several test editions in the first quarter of 2001, and a
decrease in printing and paper costs. As a percentage of revenues, selling,
general and administrative expenses increased to 45.4% in the first quarter of
2002 from 44.9% of revenues in the first quarter of 2001.

                                       14

<PAGE>

The increase in interest expense from $4.8 million in the first quarter of 2001
to $5.3 million in the first quarter of 2002 resulted primarily from additional
amortization of deferred financing costs and an increase in average borrowings.
Average borrowings under revolving credit arrangements were $35.6 million in the
first quarter of 2002 compared to $10.5 million in the first quarter of 2001.

The effective income tax benefit decreased to (34.8%) in the first quarter of
2002 from (40.2%) in the first quarter of 2001 due to a decrease in assumed
state tax benefits.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company has a licensing agreement in Japan which provides for royalty
payments based on sales of J.Crew merchandise as denominated in yen. The Company
has entered into forward foreign exchange contracts from time to time in order
to minimize this risk. At May 4, 2002 there were no forward foreign exchange
contracts outstanding.

The Company enters into letters of credit to facilitate the international
purchase of merchandise. The letters of credit are primarily denominated in U.S.
dollars. Outstanding letters of credit at May 4, 2002 were approximately $42.0
million.

                                       15

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibits.

            None

        (b) Reports on Form 8-K.

            J.Crew Group, Inc. and J.Crew Operating Corp. filed a report with
            the Securities and Exchange Commission on Form 8-K dated May 1, 2002
            with respect to the departure of Mark Sarvary as Chief Executive
            Officer and a member of the Board of Directors.

                                       16

<PAGE>

                                   SIGNATURES

           Pursuant to the requirements of the Securities Exchange Act of 1934,
each Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature for each undersigned
company shall be deemed to relate only to matters having reference to such
company.

                                               J. CREW GROUP, INC.
                                               (Registrant)


Date:      June 7, 2002                        By:  /s/ Scott M. Rosen
                                                  ------------------------------
                                                    Scott M. Rosen
                                                    Executive Vice-President and
                                                    Chief Financial Officer

                                               J. CREW OPERATING CORP.
                                               (Registrant)


Date:      June 7, 2002                        By:  /s/ Scott M. Rosen
                                                  ------------------------------
                                                    Scott M. Rosen
                                                    Executive Vice-President and
                                                    Chief Financial Officer

                                       17