UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549

                            FORM 10-Q

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

For the quarterly period ended August 1, 1998


       OR

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

For the transition period from ___________ to ___________

                Commission file number: 333-42423

                          -------------

                     J. CREW OPERATING CORP.
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        (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
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(Address of principal executive offices)            (Zip Code)

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


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      (Former name, former address, and former fiscal year,
                  if changed since last report)

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.  X   YES        NO
                     -----      -----

Shares of common stock, par value $.01 per share, outstanding at
August 1, 1998: 100.

The Registrant meets the conditions set forth in General
Instruction H (1) of Form 10-Q and is therefore filing this Form
with the reduced disclosure format.


<PAGE>


                         TABLE OF CONTENTS


                  PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements

           Consolidated Balance Sheets as of August 1, 1998
           (unaudited) and January 31, 1998

           Consolidated Statements of Operations (unaudited) for the
           twenty-six weeks and thirteen weeks ended August 1, 1998 
           and August 2, 1997

           Consolidated Statements of Cash Flows (unaudited) for the
           twenty-six weeks ended August 1, 1998 and August 2, 1997

           Notes to Unaudited Consolidated Financial Statements

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations


                    PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES


<PAGE>


                  PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

             J. CREW OPERATING CORP. AND SUBSIDIARIES

                    CONSOLIDATED BALANCE SHEETS


                                              August 1,
                                                1998      January 31,
                                             (unaudited)     1998
                                              ---------    ---------
ASSETS:                                             (in thousands)

CURRENT ASSETS:
Cash and cash equivalents .................   $  12,109    $  12,186
Accounts receivable (net of allowance for
   doubtful accounts of $5,414 and $5,438)       16,584       16,834
Merchandise inventories ...................     234,630      202,763
Prepaid expenses and other current assets .      51,597       62,399
Federal and state income taxes ............      13,909         --
                                              ---------    ---------
      Total current assets ................     328,829      294,162
                                              ---------    ---------

PROPERTY AND EQUIPMENT - AT COST: .........     181,980      166,276
      Less accumulated depreciation
        and amortization ..................     (64,842)     (55,613)
                                              ---------    ---------
                                                117,138      110,663
                                              ---------    ---------

OTHER ASSETS ..............................      17,388       14,619
                                              ---------    ---------

TOTAL ASSETS ..............................   $ 463,355    $ 419,444
                                              =========    =========
LIABILITIES AND STOCKHOLDER'S DEFICIT

CURRENT LIABILITIES:

      Notes payable - bank ................   $  56,000    $    --
      Accounts payable ....................      95,060       65,553
      Other current liabilities ...........      57,405       77,850
      Deferred income taxes ...............       8,986        8,986
      Federal and state income taxes ......          --          251
                                              ---------    ---------

      Total current liabilities ...........     217,451      152,640
                                              ---------    ---------

LONG-TERM DEBT ............................     220,000      220,000

DEFERRED CREDITS AND OTHER LONG TERM
  LIABILITIES .............................      43,591       43,578

STOCKHOLDER'S DEFICIT .....................     (17,687)       3,226
                                              ---------    ---------

TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT   $ 463,355    $ 419,444
                                              =========    =========


     See notes to unaudited consolidated financial statements.


                               1
<PAGE>


             J. CREW OPERATING CORP. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF OPERATIONS

                      Twenty-six weeks ended

                                      August 1,    August 2,
                                         1998         1997
                                      ---------    ---------
                                            (unaudited)
                                          (in thousands)

Net sales .........................   $ 337,656    $ 321,745
Other revenues ....................       4,327        5,460
                                      ---------    ---------

      Revenues ....................     341,983      327,205

Cost of goods sold including buying
  and occupancy costs .............     197,950      183,804
                                      ---------    ---------

      Gross profit ................     144,033      143,401

Selling, general and administrative
  expenses ........................     164,526      157,911
                                      ---------    ---------

      Loss from operations ........     (20,493)     (14,510)

Interest expense - net ............     (14,360)      (6,628)
                                      ---------    ---------
      Loss before income taxes ....     (34,853)     (21,138)

Income tax benefit ................      13,940        8,450
                                      ---------    ---------
      Net loss ....................   $ (20,913)   $ (12,688)
                                      =========    =========


     See notes to unaudited consolidated financial statements.


                               2
<PAGE>


             J. CREW OPERATING CORP. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF OPERATIONS

                                  Thirteen weeks ended
                                 August 1,    August 2,
                                    1998         1997
                                 ---------    ---------
                                      (unaudited)
                                     (in thousands)

Net sales ....................   $ 174,226    $ 159,518

Other revenues ...............       1,971        2,460
                                 ---------    ---------

      Revenues ...............     176,197      161,978

Cost of goods sold including
  buying and occupancy costs .     101,132       91,793
                                 ---------    ---------

      Gross profit ...........      75,065       70,185

Selling, general and
    administrative expenses ..      83,558       77,035
                                 ---------    ---------

      Loss from operations ...      (8,493)      (6,850)

Interest expense - net .......      (7,539)      (4,010)
                                 ---------    ---------

      Loss before income taxes     (16,032)     (10,860)

Income tax benefit ...........       6,240        4,250
                                 ---------    ---------

      Net loss ...............   $  (9,792)   $  (6,610)
                                 =========    =========


     See notes to unaudited consolidated financial statements.


                               3
<PAGE>


             J. CREW OPERATING CORP. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                  Twenty-six weeks ended
                                                   August 1,    August 2,
                                                     1998         1997
                                                   --------    --------
                                                        (unaudited)
                                                       (in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss ...................................   $(20,913)   $(12,688)
    Adjustments to reconcile net loss
    to net cash used in operating
    activities:
      Depreciation and amortization ............      7,204       6,318
      Amortization of deferred
       financing costs .........................      1,104         640
      Provision for losses on
       accounts receivable .....................      3,084       2,861
    Changes in assets and liabilities
    providing/(using) cash:
      Accounts receivable ......................     (2,834)     13,698
      Merchandise inventories ..................    (31,867)    (25,212)
      Prepaid expenses and other
       current assets ..........................     10,802       1,748
      Income taxes .............................    (14,160)    (18,618)
      Other assets .............................     (4,094)     (2,019)
      Accounts payable .........................     29,507     (12,314)
      Other liabilities ........................    (20,209)    (19,718)
                                                   --------    --------

   Net cash used in operating activities .......    (42,376)    (65,304)
                                                   --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures .......................    (15,704)    (26,384)
    Proceeds from construction allowances ......      2,023       7,126
                                                   --------    --------

    Net cash used in investing activities ......    (13,681)    (19,258)
                                                   --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase in notes payable, bank ............     56,000      89,500
    Repayment of long term debt ................       --          (118)
                                                   --------    --------
    Net cash provided by financing activities ..     56,000      89,382
                                                   --------    --------

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS        (57)      4,820

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .     12,166       7,132
                                                   --------    --------

CASH AND CASH EQUIVALENTS, END OF PERIOD .......   $ 12,109    $ 11,952
                                                   ========    ========


     See notes to unaudited consolidated financial statements.


                               4
<PAGE>


             J. CREW OPERATING CORP. AND SUBSIDIARIES

       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

     TWENTY-SIX WEEKS ENDED AUGUST 2, 1997 AND AUGUST 1, 1998


1.    BASIS OF PRESENTATION

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

The consolidated balance sheet as of August 1, 1998 and the
consolidated statements of operations and cash flows for the
thirteen and twenty-six week periods ended August 2, 1997 and
August 1, 1998 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 a
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 31, 1998.

The results of operations for the thirteen and twenty-six week
periods ended August 1, 1998 are not necessarily indicative of
the operating results for the full fiscal year.

Effective January 31, 1998, the Company changed its fiscal
year-end from the Friday closest to January 31 to the Saturday
closest to January 31. The Company also changed its quarterly
reporting periods to four thirteen week reporting periods from
l2-16-12-12 week reporting periods. Prior year amounts have been
restated to conform to a thirteen week period.

2.    OTHER INFORMATION

In May 1998, the Company retained an investment banking firm to
find a buyer for its Clifford & Wills mail order and factory
outlet divisions. In September 1998, the Company retained an
investment banking firm to find a buyer for its Popular Club Plan
division. The decision to sell Clifford & Wills and Popular Club
Plan reflects the Company's strategy to focus on building the J.
Crew brand. Revenues of the Clifford & Wills and Popular Club
Plan divisions were $32.6 million and $75.2 million,
respectively, for the twenty-six weeks ended August 1, 1998.


                               5
<PAGE>


Certain statements in this Report on Form 10Q under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995. 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 any
future results, performances or achievements expressed or implied
by such forward-looking statements. The Company expressly
disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statement contained
herein to reflect any change in the Company's expectations with
regard thereto or any change in events, conditions or
circumstances on which any such statement is based.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

Results of Operations - Six months ended August 1, 1998 versus
six months ended August 2, 1997

Revenues for the six months ended August 1, 1998 increased to
$342.0 million from $327.2 million in the six months ended August
2, 1997, an increase of 4.5%. This increase resulted primarily
from an increase in J. Crew Retail net sales of $26.8 million
from $81.2 million in the first six months of 1997 to $108.0
million in the first six months of 1993, offset by a decrease in
J. Crew Mail Order net sales of $7.7 million from $90.9 million
in the first six months of 1997, to $83.2 million in the first
six months of 1998. Other revenues decreased by $1.1 million due
to a decrease in service charge income as a result of the sales
of accounts receivable.

The increase in J. Crew Retail revenues was due primarily to the
sales in the first six months of 1998 from the 12 stores opened
in fiscal 1997. Comparable store sales in the first six months of
1998 increased by 7.8%. The number of stores opened at August 1,
1998 increased to 58 from 51 at January 31, 1998.

The decrease in J. Crew Mail Order revenues resulted from the
elimination of a sale book in the first quarter of 1998 and a
17.6% decrease in pages circulated from 3.4 billion in the first
six months of 1997 to 2.8 billion in the first six months of
1998. The decrease in pages circulated resulted from a change in
circulation strategy to increase the customer segmentation of
catalog mailings. This reduction in pages circulated resulted in
a decrease in paper and postage expense and an increase in
productivity or sales per page circulated.

The gross margin for the six months ended August 1, 1998 was
$144.0 million or 42.1% of revenues compared to $143.4 million or
43.8% of revenues for the six months ended August 2, 1997. The
decrease in gross margin as percentage of revenues was due to a
lower initial markup on spring merchandise in J. Crew Retail and
J. Crew Mail Order and increased markdowns to dispose of
inventory overstocks.

Selling, general and administrative expenses increased to $164.5
million for the six months ended August 1, 1998 from $157.9
million for the six months ended August 2, 1997. As a percentage
of revenues, selling, general and administrative expenses were
48.1% of revenues in the first six months of 1998 and 48.2% in
the first six months of 1997.

Selling expenses increased from $53.1 million or 16.2% of
revenues in the first six months of 1997 to $54.7 million or
16.0% of revenues in the first six months of 1998. The decrease
in the number of pages circulated in J. Crew Mail Order resulted
in a decrease of $0.7 million. This decrease was offset by
increases of $1.4 million at Clifford & Wills and $0.9 million at
Popular Club Plan.

General and administrative expenses increased from $104.8 million
or 32.0% of revenues in the first six months of 1997 to $109.8
million or 32.1% of revenues in the first six months of 1998.
This increase of $5.0 million was attributed primarily to an
increase in store-related expenses at J. Crew Retail, which
offset a decrease at J. Crew Mail Order attributable to the
implementation of a cost reduction program.

The increase in interest expense from $6.6 million in the first
six months of 1991 to $14.4 million in the first six months of
1998 resulted from the additional debt outstanding in the first
six months of 1998 as a result of the


                                6
<PAGE>


recapitalization transaction consummated in October 1997. Average
borrowings under revolving credit arrangements were $34.0 million
in the first six months of 1998 compared to $58.0 million in the
first six months of 1997.

The increase in the loss before income taxes from $21.1 million
in the first six months of 1997 to $34.9 million in the first six
months of 1998 resulted primarily from the increase in interest
expense of $7.7 million and an increase in general and
administrative expenses of $5.0 million.

Results of Operations - Three months ended August 1, 1998 versus
three months ended August 2, 1997

Revenues for the three months ended August 1, 1998 increased to
$176.2 million from $162.0 million in the three months ended
August 2, 1997, an increase of 8.8%. This increase resulted
primarily from an increase in J. Crew Retail net sales of $14.5
million from $43.5 million in the second quarter of 1997 to $58.0
million in the second quarter of 1998, and an increase in J. Crew
Mail Order net sales of $3.1 million from $41.5 million in the
second quarter of 1997, to $44.6 million in the second quarter of
1998. Other revenues decreased by $0.6 million principally as a
result of a decrease in service charge income as a result of the
sales of accounts receivable.

The increase in J. Crew Retail revenues was due primarily to the
sales in the second quarter of 1998 from the 12 stores opened in
fiscal 1997. Comparable store sales in the second quarter of 1998
increased by 9.2%. The number of stores opened at August 1, 1998
increased to 58 from 51 at January 31, 1998.

The increase in J. Crew Mail Order revenues resulted primarily
from a decrease in sales returns and promotional discounts in the
second quarter of 1998 compared to the second quarter of 1997.
Pages circulated in the second quarter of 1998 were 1.4 billion
compared to 1.7 billion in the second quarter of 1997.

The gross margin for the three months ended August 1, 1998 was
$75.1 million or 42.6% of revenues compared to $70.2 million or
43.3% of revenues for the three months ended August 2, 1997. The
decrease in gross margin as a percentage of revenues was due to a
lower initial markup on spring merchandise in J. Crew Retail and
J. Crew Mail Order and increased markdowns to dispose of
inventory overstocks.

Selling, general and administrative expenses increased to $83.6
million for the three months ended August 1, 1998 from $77.0
million for the three months ended August 2, 1997. As a
percentage of revenues, selling, general and administrative
expenses were 47.4% of revenues in the second quarter of 1998 and
47.5% in the second quarter of 1997.

Selling expenses increased from $25.5 million or 15.7% of
revenues in the second quarter of 1997 to $28.0 million or 15.9%
of revenues in the second quarter of 1998. This increase was due
primarily to an increase of $1.5 million at J. Crew Mail Order,
which resulted from an increase in paper prices in the second
quarter of 1998 compared to the second quarter of 1997 and a
reduction in the second quarter of 1997 from the renegotiation of
a catalog vendor contract that was retroactive to the beginning
of the fiscal year.

General and administrative expenses increased from $51.5 million
or 31.8% of revenues in the second quarter of 1997 to $55.6
million or 31.6% of revenues in the second quarter of 1998. This
increase of $4.1 million was attributed primarily to an increase
in store-related expenses at J. Crew Retail.

The increase in interest expense from $4.0 million in the second
quarter of 1997 to $7.5 million in the second quarter of 1998
resulted from the additional debt outstanding in the second
quarter of 1998 as a result of the recapitalization transaction
consummated in October 1997. Average borrowings under revolving
credit arrangements were $46.0 million in the second quarter of
1998 compared to $76.0 million in the second quarter of 1997.

The increase in the loss before income taxes from $10.9 million
in the second quarter of 1997 to $16.0 million in the second
quarter of 1998 resulted primarily from the increase in interest
expense of $3.5 million. The increase in


                               7
<PAGE>


selling, general and administrative expenses of $6.5 million was
partially offset by an increase in gross margin of $4.9 million
resulting from the increase in net sales.

Liquidity and Capital Resources

Cash flow used in operations improved from a use of $65.3 million
in the first six months of 1997 to a use of $42.4 million in the
first six months of 1998. This decrease was primarily due to the
change in accounts payable from a use of funds of $12.3 million
in the six months ended August 2, 1997 to a source of funds of
$29.5 million in the six months ended August 1, 1998, resulting
from a higher accounts payable balance at January 31, 1997 than
at January 31, 1998 and a decrease in funds provided from the
collection of accounts receivable of $16.5 million due to the
sale of accounts receivable.

As a result of the increase in cash flow from operations,
borrowings under the revolving credit line decreased to $56.0
million at August 1, 1998 from $89.5 million at August 2, 1997.

Inventories at August 1, 1998 were $234.6 million compared to
$222.9 million at August 2, 1997. This increase is attributable
to the increase in the number of retail stores in operation at
August 1, 1998 compared to August 2, 1997.

Capital expenditures for the six months ended August 1, 1998 were
incurred primarily to fund the opening of seven new retail
stores.

The Company has retained two investment banking firms to find a
buyer for its Clifford & Wills mail-order and factory outlet
divisions and its Popular Club Plan division. The decision to
sell Clifford & Wills and Popular Club Plan reflects the
Company's strategy to focus on building the J. Crew brand.
Revenues of the Clifford & Wills and Popular Club Plan divisions
were $32.6 million and $75.2 million, respectively, in the
twenty-six weeks ended August 1, 1998.

The Year 2000 Issue

The effect of Year 2000 issues on the Company's operations are
being addressed by the Company's Information Technology
Department. A plan has been developed which identifies the
systems and related programs which must be upgraded and a
timetable has been established for the completion of these
upgrades. This plan contemplates the use of internal programming
resources, outside consulting services, system upgrades from
existing vendors and the replacement of existing packages with
packages that are Year 2000 compliant. The designed plan
estimates that the Company will be in compliance with Year 2000
issues by the Fall of 1999. The estimated cost of the Year 2000
upgrade is not expected to be material to the Company.

The Company does not expect Year 2000 issues to materially effect
its business. However, there can be no assurance that this will
be the case. The ability of third parties with which the Company
transacts business to adequately address Year 2000 issues is
outside the control of the Company. There can be no assurance
that the failure of the third parties to address Year 2000 issues
will not have a material adverse effect on the Company's
business.


                                8
<PAGE>


                    PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Equal Employment Opportunity Commission ("EEOC") filed suit
on August 6, 1998 in the U.S. District Court for the District of
Connecticut against J. Crew Group, Inc. ("J. Crew Group"), of
which the Company is a wholly-owned subsidiary, alleging that J.
Crew Group, through its Popular Club Plan division, (the
"Defendants") is engaged in hiring conduct which violates Title
VII of the Civil Rights Act of 1964 and Title I of the Civil
Rights Act of 1991. Specifically, the complaint alleges that
Popular Club Plan discriminates against male applicants for
customer service and assistant manager positions at its service
centers in New England. The EEOC seeks unspecified monetary
damages and an injunction enjoining the Defendants from engaging
in discriminatory hiring practices based on gender. The Company
is vigorously defending itself against these allegations.

Although it is not possible to predict with certainty the
eventual outcome of any litigation, in the opinion of management,
the foregoing proceedings are not expected to have a material
adverse effect on the Company's financial position or results of
operations.

Other than the proceedings discussed above, there are no material
legal proceedings presently pending to which J. Crew Operating
Corp. is a party or of which any of its property is the subject.

ITEM 5.    OTHER INFORMATION

Not applicable.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit 27.  Financial Data Schedule.

(b)  There were no reports filed on Form 8-K during the quarter
     ended August 1, 1998.


                               9
<PAGE>


                            SIGNATURES

Pursuant to the requirements of the Securities and 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 15, 1998      By: /s/ Howard Socol
                                 --------------------------
                                  Howard Socol
                                  Chief Executive Officer


Date: September 15, 1998      By: /s/ Scott Rosen
                                 --------------------------
                                  Scott Rosen
                                  Chief Financial Officer


                               10