<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      July 29, 2000

Commission file number     333-42423



                            J. CREW OPERATING CORP.
            (Exact name of registrant as specified in its charter)

                   Delaware                                 22-3540930
        (State or other jurisdiction                    (I.R.S. Employer
      of incorporation or organization)                 Identification No.)


                    770 Broadway, New York, New York 10003
                   (Address of principal executive offices)
                                  (Zip code)

                                 (212) 209-2500
              (Registrant's telephone number, including area code)



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 __
                                       ---

As of August 25, 2000 there were outstanding 100 shares of Common Stock, par
value $.01 per share.

The registrant 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 OPERATING CORP. AND
                                 SUBSIDIARIES

                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                 July 29,               January 29,
                                 Assets                                            2000                    2000
                                 ------                                            ----                    ----
                                                                              (unaudited)
                                                                                           (in thousands)
<S>                                                                            <C>                       <C>
Current assets:
     Cash and cash equivalents                                                  $   12,930                $  38,693
     Merchandise inventories                                                       145,117                  129,928
     Prepaid expenses and other current assets                                      24,405                   30,083
     Net assets held for disposal                                                    5,440                    8,927
                                                                                ----------                ---------

           Total current assets                                                    187,892                  207,631

Property and equipment - at cost                                                   240,505                  216,083
                  Less accumulated depreciation and amortization                   (90,832)                 (77,683)
                                                                                ----------                ---------
                                                                                   149,673                  138,400
                                                                                ----------                ---------

Deferred income tax assets                                                           6,817                    6,817
Other assets                                                                        10,055                   10,758
                                                                                ----------                ---------
            Total assets                                                        $  354,437                $ 363,606
                                                                                ==========                =========

                                 Liabilities and Stockholder's Deficit
                                 -------------------------------------

Current liabilities:
     Notes payable - bank                                                       $    1,000                $      --
     Accounts payable and other current liabilities                                119,201                  111,173
     Federal and state income taxes                                                  7,622                   15,956
     Deferred income tax liabilities                                                 5,842                    5,842
                                                                                ----------                ---------

           Total current liabilities                                               133,665                  132,971
                                                                                ----------                ---------

Long-term debt                                                                     180,000                  184,000
                                                                                ----------                ---------

Deferred credits and other long-term liabilities                                    48,448                   48,277
                                                                                ----------                ---------

Due to J.Crew Group, Inc.                                                              903                      903
                                                                                ----------                ---------

Stockholder's deficit                                                               (8,579)                  (2,545)
                                                                                -----------               ---------


           Total liabilities and stockholder's deficit                          $  354,437                $ 363,606
                                                                                ==========                =========
</TABLE>

See notes to unaudited condensed consolidated financial statements.

                                       2
<PAGE>

                          J. CREW OPERATING CORP. AND
                                 SUBSIDIARIES

                Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                          Twenty-six weeks ended
                                                                     July 29,                  July 31,
                                                                     --------                  -------
                                                                        2000                      1999
                                                                        ----                      ----
                                                                                   (unaudited)
                                                                                  (in thousands)
<S>                                                                <C>                        <C>
Revenues:

    Net sales                                                      $  320,260                 $ 290,292
    Other                                                               1,373                     1,393
                                                                   ----------                 ---------
                                                                      321,633                   291,685

Cost of goods sold including buying and occupancy costs               176,800                   166,281

Selling, general and administrative expenses                          143,653                   131,150
                                                                   ----------                 ---------

                   Income/(loss) from operations                        1,180                    (5,746)

Interest expense - net                                                (11,314)                  (12,819)
                                                                   ----------                 ---------

                   Loss before income taxes                           (10,134)                  (18,565)

Income tax benefit                                                      4,100                     7,585
                                                                   ----------                 ---------

                   Net loss                                        $   (6,034)                  (10,980)
                                                                   ==========                 =========
</TABLE>



See notes to unaudited condensed consolidated financial statements.

                                       3
<PAGE>

                          J. CREW OPERATING CORP. AND
                                 SUBSIDIARIES

                Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                           Thirteen weeks ended
                                                                     July 29,                  July 31,
                                                                     --------                  -------
                                                                        2000                      1999
                                                                        ----                      ----
                                                                                   (unaudited)
                                                                                 (in thousands)
<S>                                                                 <C>                     <C>
Revenues:

    Net sales                                                      $  162,228                 $ 148,012
    Other                                                                 596                       698
                                                                   ----------                 ---------
                                                                      162,824                   148,710

Cost of goods sold including buying and occupancy costs                91,321                    87,363

Selling, general and administrative expenses                           70,656                    63,117
                                                                   ----------                 ---------

                   Income/(loss) from operations                          847                    (1,770)

Interest expense - net                                                 (5,741)                   (6,473)
                                                                   ----------                 ---------

                   Loss before income taxes                            (4,894)                   (8,243)

Income tax benefit                                                      2,000                     3,455
                                                                   ----------                 ---------

                   Net loss                                        $   (2,894)               $   (4,788)
                                                                   ==========                ==========
</TABLE>

See notes to unaudited condensed consolidated financial statements.

                                       4
<PAGE>

                          J. CREW OPERATING CORP. AND
                                 SUBSIDIARIES

                Condensed Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                              Twenty-six weeks ended
                                                                              ----------------------
                                                                             July 29,       July 31,
                                                                             --------       --------
                                                                               2000            1999
                                                                               ----            ----
                                                                                    (unaudited)
                                                                                  (in thousands)
<S>                                                                        <C>             <C>
CASH FLOW FROM OPERATING ACTIVITIES:

Net loss                                                                   $   (6,034)     $ (10,980)

Adjustments to reconcile net loss to net cash (used in) provided
 by operating activities:

     Depreciation and amortization                                             10,505          7,988
     Writeoff of software development costs                                        --            750
     Amortization of deferred financing costs                                     982            971

Changes in operating assets and liabilities:

     Merchandise inventories                                                  (15,189)        (5,394)
     Prepaid expenses and other current assets                                  5,678          8,696
     Other assets                                                                (352)          (564)
     Net assets held for disposal                                               3,487         (1,096)
     Accounts payable and other liabilities                                     7,399            141
     Federal and state income taxes                                            (8,334)           456
                                                                           ----------      ---------

     Net cash (used in) provided by operating activities                       (1,858)           968
                                                                           ----------      ---------

CASH FLOW FROM INVESTING ACTIVITIES:

     Capital expenditures                                                     (24,422)       (21,601)
     Proceeds from construction allowances                                      3,517          4,940
                                                                           ----------      ---------

     Net cash used in investing activities                                   (20,905)        (16,661)
                                                                           ----------      ---------

CASH FLOW FROM FINANCING ACTIVITIES:

     Increase in notes payable, bank                                            1,000         22,000
     Repayment of long-term debt                                               (4,000)            --
                                                                           ----------      ---------

     Net cash (used in)/provided by financing activities                       (3,000)        22,000
                                                                           ----------      ---------

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                              (25,763)         6,307

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                38,693          9,643
                                                                           ----------      ---------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                  $   12,930      $  15,950
                                                                           ==========      =========
</TABLE>



See notes to unaudited condensed consolidated financial statements.

                                       5
<PAGE>

                   J. CREW OPERATING CORP. AND SUBSIDIARIES

        NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      Thirteen and twenty-six weeks ended July 29, 2000 and July 31, 1999

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 July 29, 2000 and the
      condensed consolidated statements of operations and cash flows for the
      thirteen and twenty-six week periods ended July 29, 2000 and July 31, 1999
      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 generally accepted accounting
      principles 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 January 29, 2000.

      The revenues and expenses of the discontinued Clifford and Wills catalog
      and outlet store operations for the thirteen and twenty-six week period
      ended July 29, 2000 and July 31, 1999 were not material and, as a result,
      have been netted in the accompanying consolidated statement of operations.
      In February 2000 the Company sold certain intellectual property assets of
      Clifford and Wills, Inc. to Spiegel Catalog, Inc. for $3.9 million. In
      connection with this sale, the Company agreed to cease the fulfillment of
      catalog orders but retained the right to operate its outlet stores and
      conduct other liquidation sales of inventories through December 31, 2000.

      The results of operations for the twenty-six week period ended July 29,
      2000 are not necessarily indicative of the operating results for the full
      fiscal year.

                                       6
<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, political or financial instability in the countries where the
Company's goods are manufactured, postal rate increases, paper and printing
costs, 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

RESULTS OF OPERATIONS - THIRTEEN WEEKS ENDED JULY 29, 2000 VERSUS THIRTEEN WEEKS
ENDED JULY 31, 1999.

Consolidated revenues increased from $148.7 million in the thirteen weeks ended
July 31, 1999 to $162.8 million for the thirteen weeks ended July 29, 2000. This
increase can be attributed to an increase of $15.8 million in J.Crew Retail
revenues.

The revenues of J.Crew Retail increased from $71.4 million in the second quarter
of 1999 to $87.2 million in the second quarter of 2000. This increase was due
primarily to the sales from new stores opened for less than a full year.
Comparable store sales in the second quarter of 2000 increased by 3.7%. The
number of stores open at July 29, 2000 increased to 88 from 83 at April 29,2000.

The revenues of J.Crew Direct (which includes the catalog and Internet
operations) decreased from $51.0 million in the second quarter of 1999 to $50.8
million in the second quarter of 2000. Revenues from jcrew.com increased to
$17.6 million in second quarter of 2000 from $9.4 million in the second quarter
of 1999. Catalog revenues in the second quarter of 2000 decreased to $33.2
million from $41.6 million in the second quarter of 1999, as the Company
continued to migrate customers to the Internet. Pages circulated were
approximately the same in both periods.

The revenues of J.Crew Factory decreased from $25.6 million in the second
quarter of 1999 to $24.2 million in the second quarter of 2000. There were 42
stores open during the second quarter of 2000 compared to 45 stores during the
second quarter of 1999, which accounted for this decrease.

Cost of goods sold, including buying and occupancy costs, decreased as a
percentage of revenues from 58.7% in the second quarter of 1999 to 56.1% in the
second quarter of 2000. This decrease is attributable primarily to an increase
in initial mark-up in the second quarter of 2000 compared to the second quarter
of 1999.

                                       7
<PAGE>

Selling, general and administrative expenses increased from $63.1 million in the
second quarter of 1999 to $70.7 million in the second quarter of 2000. This
increase resulted from an increase in general and administrative expenses of
$6.6 million and an increase in selling expense of $1.0 million. The increase in
general and administrative expenses was due primarily to the increase in the
number of retail stores in operation during the second quarter of 2000 compared
to the second quarter of 1999 and an increase in the bonus provision in the
second quarter of 2000. The increase in selling expense from the second quarter
of 1999 to the second quarter of 2000 resulted from higher catalog costs in the
second quarter of 2000. As a percentage of revenues, selling, general and
administrative expenses increased from 42.4% in the second quarter of 1999 to
43.4% of revenues in the second quarter of 2000.

The decrease in interest expense from $6.5 million in the second quarter of 1999
to $5.7 million in the second quarter of 2000 resulted primarily from the
repayment of $14 million of the term loan and a decrease in average borrowings
under revolving credit arrangements from $34.3 million in the second quarter of
1999 to $7.9 million in the second quarter of 2000.

The decrease in the loss before income taxes from $8.2 million in the thirteen
weeks ended July 31, 1999 to $4.9 million in the thirteen weeks ended July 29,
2000 resulted primarily from the improvement in sales volume and merchandising
margin.

RESULTS OF OPERATIONS - TWENTY-SIX WEEKS ENDED JULY 29, 2000 VERSUS TWENTY-SIX
WEEKS ENDED JULY 31, 1999.

Consolidated revenues for the six months ended July 29, 2000 increased to
$321.6 million from $291.7 million in the six months ended July 31, 1999. This
increase was due primarily to an increase of $29.9 million in J.Crew Retail
revenues.

Revenues of J.Crew Retail increased from $136.0 million in the six months ended
July 31, 1999 to $165.9 million in the six months ended July 29, 2000. This
increase was due primarily to the sales from the new stores opened for less than
a full year. Comparable stores sales in the six months ended July 29, 2000
increased by 3.5%. The number of stores open at July 29, 2000 increased to 88
from 81 at January 29, 2000.

Revenues of J.Crew Direct (which includes the catalog and Internet operations)
increased from $109.7 million in the six months ended July 31, 1999 to $111.0
million in the six months ended July 31, 2000. Revenues from jcrew.com increased
to $37.0 million in the six months ended July 29, 2000 from $19.3 million in the
six months ended July 31, 1999. Catalog revenues decreased from $90.4 million in
the first six months of 1999 to $74.0 million in the first six months of 2000 as
the Company continued to migrate customers to the Internet. Pages circulated
were approximately the same in both periods.

Revenues of J.Crew Factory decreased from $44.6 million in the six months ended
July 31, 1999 to $43.4 million in the six months ended July 29, 2000. There were
42 stores open during the first six months of 2000 compared to 45 stores in the
same period last year, which accounted for this decrease.

Costs of good sold, including buying and occupancy costs, decreased as a
percentage of revenues from 57.0% in the six months ended July 31, 1999 to 55.0%
in the six months ended July 29, 2000. This decrease resulted primarily from an
increase in initial mark-up in the first six months of 2000 compared to the
first six months of 1999.

Selling, general and administrative expenses increased from $131.1 million in
the six months ended July 31, 1999 to $143.7 million in the six months ended
July 29, 2000. This increase resulted from an increase in general and
administrative expenses of $15.2 million due to the increase in the number of
retail stores in operation during the six months ended July 29, 2000 compared to
the six months ended July 31, 1999 and an increase in the bonus provision in the
second quarter of 2000.

Selling expenses were $28.0 million for the six months ended July 29, 2000
compared to $30.6 million for the six months ended July 31, 1999. The decrease
in selling expenses resulted from higher catalog costs in

                                       8
<PAGE>

the six months ended July 31, 1999. As a percentage of revenues, selling,
general and administrative expense decreased to 44.7% of revenues in the six
months ended July 29, 2000 from 45.0% in the six months ended July 31, 1999.

The decrease in interest expense from $12.8 million in the six months ended July
31, 1999 to $11.3 million in the six months ended July 29, 2000 resulted
primarily from the pay down of $14.0 million of the term loan and a decrease in
average borrowings from $30.4 million in the six months ended July 31, 1999 to
$4.8 million in the six months ended July 29, 2000.

The decrease in the loss before income taxes from $18.6 million in the six
months ended July 31, 1999 to $10.1 million in the six months ended July 29,
2000 resulted primarily from the improvement in sales volume and merchandising
margin.

                                       9
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)    Exhibits.

                 10. Amendment dated July 24, 2000 to the 1997 Stock Option Plan
                     of Registrant.

                 27. Financial Data Schedule.

           (b)   Reports on Form 8-K.

                 No reports on Form 8-K were filed during the period covered by
this Report.

                                      10
<PAGE>

                                   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 OPERATING CORP.
                                      (Registrant)

Date:      September 8, 2000          By: /s/  Mark Sarvary
                                          -------------------
                                          Mark Sarvary
                                          Chief Executive Officer

Date:      September 8, 2000          By: /s/  Scott M. Rosen
                                          -------------------
                                          Scott M. Rosen
                                          Chief Financial Officer

                                      11