<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                   _________
                                   FORM 10-K

        ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

                  For the fiscal year ended February 3, 2001

                       Commission File Number  333-42427
                                               ---------

                              J. CREW GROUP, INC.
            (Exact name of registrant as specified in its charter)

           New York                                         22-2894486
           --------                                         ----------
 (State or other jurisdiction of               (IRS Employer Identification No.)
 incorporation or organization)

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

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

   Securities registered pursuant to Section 12(b) of the Act:  None

   Securities registered pursuant to Section 12(g) of the Act:  None

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
     -

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

The common stock of the registrant is not publicly traded. Therefore, the
aggregate market value is not readily determinable.

As of April 1, 2001, there were 11,743,265 shares of Common Stock, par value
$.01 per share, outstanding.

Documents incorporated by reference:  None
<PAGE>

FORWARD LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K under the captions
"Business", "Selected Financial Data", "Management's Discussion and Analysis of
Financial Condition and Results of Operations", "Financial Statements and
Supplementary Data" and elsewhere 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-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.

References herein to fiscal years are to the fiscal years of J. Crew Group,
Inc., which end on the Friday closest to January 31 in the following calendar
year for fiscal year 1996 and on the Saturday closest to January 31 in the
following calendar year for fiscal years 1997, 1998, 1999 and 2000. Accordingly,
fiscal years 1996, 1997, 1998, 1999 and 2000 ended on January 31, 1997, January
31, 1998, January 30, 1999, January 29, 2000 and February 3, 2001. All fiscal
years for which financial information is included had 52 weeks, except fiscal
year 2000 which had 53 weeks.

References in this Report to the "Company", "J. Crew" and "Holdings" mean J.
Crew Group, Inc. and its subsidiaries, unless the context requires otherwise.

                                    Part I

ITEM 1.  BUSINESS

General

The Company is a leading retailer of women's and men's apparel, shoes and
accessories operating under the J. Crew (R) brand name. The Company has built a
strong and widely recognized brand name known for its timeless styles at price
points that the Company believes represent exceptional product value. The J.
Crew image has been built and reinforced over its 18-year history through the
circulation of more than 800 million catalogs that use magazine-quality
photography to portray a classic American perspective and aspirational
lifestyle. Many of the original items introduced by the Company in the early
1980s (such as the rollneck sweater, weathered chino, barn jacket and pocket
tee) were instrumental in establishing the J. Crew brand and continue to be core
product offerings. The Company has capitalized on the strength of the J. Crew
brand to provide customers with clothing to meet more of their lifestyle needs,
including casual, career and sport.

The J. Crew merchandising strategy emphasizes timeless styles and a broad
assortment of high-quality products designed to provide customers with one-stop
shopping opportunities at attractive prices. J. Crew retail stores, catalogs and
its Internet site offer a full line of men's and women's basic durables (casual
weekend wear), workwear (casual weekday wear) sport, swimwear, accessories and
shoes, as well as the more tailored men's and women's "Classics" lines.
Approximately, 60% of the Company's J.Crew brand sales are derived from its core
offerings of classics, durables and sport clothing, the demand for which the
Company believes is stable and resistant to changing fashion trends. The Company
believes that the J. Crew image and merchandising strategy appeal to college-
educated, professional and

                                       1
<PAGE>

affluent customers who, in the Company's experience, have demonstrated strong
brand loyalty and a tendency to make repeat purchases.

J. Crew products are distributed exclusively through the Company's retail and
factory outlet stores, catalogs and the Company's Internet site, jcrew.com. The
Company currently circulates over 70 million J. Crew catalogs per annum and
operates 105 J. Crew retail stores and 41 J. Crew factory outlet stores. In
addition, J. Crew products are distributed through 70 free-standing and shop-in-
shop stores in Japan under a licensing agreement with Itochu Corporation.

The Company has three major operating divisions: J. Crew Retail, J. Crew Direct,
and J. Crew Factory Outlets, each of which operate under the J. Crew brand name.
In 2000, products sold under the J. Crew brand contributed $787.7 million in net
sales. J. Crew brand net sales in 2000 were comprised of $406.8 million from J.
Crew Retail, $284.8 million from J. Crew Direct and $96.1 million from J. Crew
Factory Outlet. The Company also markets to its customers through its Internet
site (jcrew.com). Net sales derived from the Internet, which were $107.3 million
for 2000, are included in J. Crew Direct net sales. The Company also generated
licensing revenues of $3.0 million and shipping and handling fees of $35.3
million.

Effective as of October 30, 1998 the Company sold Popular Club Plan, Inc. and
subsidiaries (PCP) to The Fingerhut Companies, Inc. for $42.0 million and the
assumption of an accounts receivable securitization facility. Revenues for PCP
for the nine months ended October 30, 1998 were $130.6 million. A gain on the
sale of $10.0 million was included in the results of operations in fiscal 1998.
An additional gain of $1.0 million was recognized in fiscal 1999 from the
reversal of certain estimated liabilities recorded at the date of sale.

In 1998, management of the Company made a decision to exit the operations of its
Clifford & Wills catalog and factory outlet subsidiaries (C&W). Revenues for C&W
for the year ended January 30, 1999 were $83.8 million. A charge of $13.3
million was included in fiscal 1998 operations to write down the assets of C&W
to net realizable value and to provide for certain additional costs in
connection with the discontinuance of the C&W operations, including severance
and lease termination costs. Additionally, fourth quarter charges of $1.7
million, included in selling expense, were incurred relating to deferred catalog
costs. In February 2000 the Company sold certain intellectual property assets of
C&W 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. After consideration of the proceeds from this sale
and other terms of the agreement, the Company provided an additional $4.0
million to write down inventories to net realizable value as of January 29,
2000. During the year ended February 3, 2001 the remaining balance of net assets
applicable to C&W of $4.1 million was written off.

J. Crew Brand

Merchandising and Design Strategy

Over time, the J. Crew merchandising strategy has evolved from providing unisex
products to creating full lines of men's and women's clothing, shoes and
accessories. This strategy had the effect of increasing overall J. Crew brand
sales volume, and significantly increasing revenues from sales of women's
apparel as a percentage of total J. Crew brand sales from 50% in 1996 to 65% in
2000.

Every J. Crew product is designed by an in-house design staff, to reflect a
classic, clean aesthetic that is consistent with the brand's American lifestyle
image. Design teams are formed around J. Crew product lines and categories to
develop concepts, themes and products for each of the Company's J. Crew
businesses. Members of the J. Crew technical design team develop construction
and fit specifications for every product to ensure quality workmanship and
consistency across product lines. These teams work in close collaboration with
the product development, merchandising and production staffs in order to gain
market and other input. Product merchandisers provide designers with market
trend and other information at initial stages of the design process. J. Crew
designers and merchants source globally for fabrics, yarns and finished products
to ensure quality and value, while manufacturing teams research and develop key
vendors worldwide to identify and maintain the essential characteristics for
every style.

                                       2
<PAGE>

Sourcing, Production and Quality

The Company maintains separate merchandising, design, manufacturing and quality
assurance teams for the production of J. Crew brand merchandise. The Company's
products are designed exclusively by in-house design and product development
teams which support each line and class of product. These teams provide
individual attention and expertise to every style, ensuring that these styles
fit the J. Crew brand image.

The Company's merchandise is produced for the Company by a variety of
manufacturers, both domestically and outside the United States. The Company does
not own or operate any manufacturing facilities, instead contracting with third
party vendors in over 22 countries for the production of its products. In 2000,
approximately 80% of the Company's J. Crew brand products were sourced in the
Far East, 10% were sourced domestically and 10% were sourced in Europe and other
regions. Rarely does the Company represent the majority of any one vendor's
business and no one vendor supplies more than 10% of the Company's merchandise.

The Company retains independent buying agents to conduct in-line and final
quality inspections at each manufacturing site. Random inspections of all
incoming merchandise at the Lynchburg and Asheville distribution facilities
further assure that the Company's products are of a consistently high quality.

Due to the high concentration of foreign suppliers of J. Crew brand merchandise,
the Company estimates seven month lead times for its products. The Company has
established through the use of domestic vendors and strategic partnerships, a
core group of long-term suppliers to provide quick response programs at
significantly shorter lead times for certain product categories.

Distribution

The Company operates two major telemarketing and distribution facilities for its
operations. Order fulfillment for J. Crew Direct takes place at the 406,500
square foot telemarketing and distribution center located in Lynchburg,
Virginia. The Lynchburg facility processes approximately 3.8 million orders per
year and employs approximately 900 full and part-time employees during its non-
peak season and an additional 500 employees during its peak season.

A 192,500 square foot telemarketing and distribution facility in Asheville,
North Carolina serves as the main distribution center for the retail and outlet
store operations and also houses a J. Crew Direct telemarketing center. This
facility employs approximately 300 full- and part-time employees during its non-
peak season and an additional 200 employees during the peak holiday season.

The Company ships merchandise via UPS, the United States Postal Service and
FedEx. To enhance efficiency, each facility is fully equipped with a highly
advanced telephone system, an automated warehouse locator system and an
inventory bar coding system and the Lynchburg facility has an automated packing
and shipping sorter.

Management Information Systems

The Company's management information systems are designed to provide, among
other things, comprehensive order processing, production, accounting and
management information for the marketing, manufacturing, importing and
distribution functions of the Company's business. The Company has point-of-sale
registers in its J. Crew Retail and Factory Outlet stores that enable it to
track inventory from store receipt to final sale on a real-time basis. The
Company believes its merchandising and financial systems, coupled with its
point-of-sale registers and software programs, allow for rapid stock
replenishment, concise merchandise planning and real-time inventory accounting
practices. The Company's telephone and telemarketing systems, warehouse package
sorting systems, automated warehouse locator and inventory bar coding systems
utilize advanced technology. These systems have provided the Company with a
number of benefits in the form of enhanced customer service, improved
operational efficiency and increased management control and reporting. In
addition, the Company's real-time inventory systems provide inventory management
on a per SKU basis and allow for an efficient fulfillment process.

                                       3
<PAGE>

The Company is in the process of installing a SAP enterprise resource planning
system for its future information technology requirements. This system is
scheduled for a phased-in implementation over a period of three years. In fiscal
2000 the Company's accounting systems were implemented. A corporate wide
purchasing system and retail sales (including new point of sale registers) and
inventory systems are scheduled for implementation in fiscal 2001. In February
2001, the Company outsourced it data center, desktop, network and
telecommunications services management and operations support.

J. Crew Retail

During fiscal 2000, J. Crew Retail generated net sales of $406.8 million,
representing 51.6% of the Company's total net sales.

The principal aspect of the Company's business strategy is an expansion program
designed to reach new and existing customers through the opening of J. Crew
Retail stores. In addition to generating sales of J. Crew products, J. Crew
Retail stores help set and reinforce the J. Crew brand image. The stores are
designed in-house and fixtured to create a distinctive J. Crew environment and
store associates are trained to maintain high standards of visual presentation
and customer service. The result is a complete statement of J. Crew's timeless
American style, classic design and attractive product value.

The Company believes that J. Crew Retail derives significant benefits from the
concurrent operation of J. Crew Direct. The broad circulation of J. Crew
catalogs and distribution of e-mails performs an advertising function, enhancing
the visibility and exposure of the brand, aiding the expansion of the retail
concept and increasing the profitability of the stores.

The Company believes that its J. Crew Retail stores are among the most
productive in its industry segment. All of the Company's J. Crew Retail stores
are profitable and have generated positive store contribution within the first
12 months of opening. J. Crew Retail stores that were open during all of fiscal
2000 averaged $4.6 million per store in sales, produced sales per gross square
foot of $567 and generated store contribution margins of approximately 24.0%.
The Company believes that these results compare favorably to the average among
retailers that the Company believes to be its primary competitors. J. Crew
Retail stores have an average size of 7,933 total square feet.

As of February 3, 2001 J. Crew Retail operated 105 retail stores nationwide,
having expanded from 31 stores in 1996. The Company opened 24 stores in fiscal
2000 and intends to open approximately 30 stores in fiscal 2001. The stores are
located in upscale shopping malls and in retail areas within major metropolitan
markets that have an established higher-end retail business.

The table below highlights certain information regarding J. Crew Retail stores
opened through fiscal 2000.

<TABLE>
<CAPTION>

                        Stores  Stores                           Average
                        ------  ------                         -----------
                        Opened  Closed    Stores      Total    Store Total
                        ------  ------  -----------  --------  -----------
         Stores Open    During  During    Open at     Square     Square
        --------------  ------  ------  -----------  --------  -----------
         At Beginning   Fiscal  Fiscal    End of     Footage   Footage at
        --------------  ------  ------  -----------  --------  -----------
        Of Fiscal Year   Year    Year   Fiscal Year  (000's)   End of Year
        --------------  ------  ------  -----------  --------  -----------
<S>     <C>             <C>     <C>     <C>          <C>       <C>

1996          31          8       --       39          338        8,667
1997          39         12       --       51          428        8,392
1998          51         14       --       65          530        8,150
1999          65         16       --       81          668        8,243
2000          81         24       --      105          833        7,933
</TABLE>

                                       4
<PAGE>

J. Crew Direct

Since its inception in 1983, J. Crew Direct has distinguished itself from other
catalog retailers by its award-winning catalog, which utilizes magazine-quality
"real moment" pictures to depict an aspirational lifestyle image. During fiscal
2000, J. Crew Direct distributed 33 catalog editions with a combined circulation
of approximately 73 million. J. Crew Direct generated $284.8 million in net
sales (including $107.3 million from its Internet site) representing 36.2% of
the Company's total J. Crew brand net sales in fiscal 2000.

Circulation Strategy

J. Crew Direct circulation strategy focuses on continually improving the
segmentation of customer files and the acquisition of additional customer names.
In 2000, approximately 60% of J. Crew Direct revenues were from customers in the
12-month buyer file (buyers who have made a purchase from any J. Crew catalog or
on the Internet in the prior 12 months).

The Company segments its customer file and tailors its catalog offerings to
address the different product needs of its customer segments. To increase core
catalog productivity and improve the effectiveness of marginal and prospecting
circulation, each customer segment is offered appropriate catalog editions. The
Company currently circulates Base, Women's, Version, Prospect and Sale catalogs
to targeted customer segments.

Descriptions of the Company's current catalogs follow:

Base Books. These catalogs contain the entire mail order product offering and
are sent primarily to 12-month buyers.

Women's Books. The Women's books feature women's merchandise and are sent to
buyers who purchase primarily women's merchandise. These books represent an
additional customer contact potentially generating incremental revenue from
women customers.

Version Books. These editions are abridged versions (in page count) of the Base
Books and are sent to less active and prospective customers in order to cost
effectively reactivate old customers and acquire new customers.

Prospect Books. These editions are abridged versions (in size and page count) of
the Version Books and are sent to prospective customers to cost effectively
acquire new customers.

Sale Books. These catalogs contain overstock merchandise to be sold at reduced
prices without adversely affecting the J. Crew brand image.

In 2000, total circulation decreased to approximately 73 million from 75 million
in 1999, and pages circulated were approximately 8.7 billion in 2000 compared to
9.3 billion in 1999.

J. Crew Direct name acquisition programs are designed to attract new customers
in a cost-effective manner. The Company acquires new names from various sources,
including its Internet site, list rentals, exchanges with other catalog and
credit card companies, "friends' name" card inserts, and through J. Crew Retail
stores which represent an increasingly significant resource in prospecting for
new names. In addition, the Company is in the process of placing telephones in
its J. Crew Retail stores with direct access to the J. Crew Direct telemarketing
center to allow customers in the stores to order catalog-specific or out-of-
stock items.

Catalog Creation and Production

The Company is distinguished from other catalog retailers by its award-winning
catalog, which utilizes magazine-quality "real moment" pictures to depict an
aspirational lifestyle image. All creative work on the catalogs is coordinated
by J. Crew personnel to maintain and reinforce the J. Crew brand image.
Photography is executed both on location and in studios, and creative design and
copy writing are executed on a desk-top publishing system. Digital images are
transmitted directly to outside printers, thereby reducing lead times and
improving reproduction quality. The Company believes that appropriate page
presentation of its merchandise stimulates demand and therefore places great
emphasis on page layout.

                                       5
<PAGE>

J. Crew Direct does not have long-term contracts with paper mills. Projected
paper requirements are communicated on an annual basis to paper mills to ensure
the availability of an adequate supply. Management believes that the Company's
long-standing relationships with a number of the largest coated paper mills in
the United States allow it to purchase paper at favorable prices commensurate
with the Company's size.

Telemarketing and Customer Service

J. Crew Direct's primary telemarketing and fulfillment facilities are located in
Lynchburg, Virginia. An additional telemarketing facility is located in
Asheville, North Carolina. Telemarketing operations are open 24 hours a day,
seven days a week and handled over 5.0 million calls in fiscal 2000. Orders for
merchandise may be received by telephone, facsimile, mail and on the Company's
Internet site. The telemarketing centers are staffed by a total of 650 full-time
and part time telemarketing associates, and up to 300 additional associates
during peak periods, who are trained to assist customers in determining the
customer's correct size and to describe merchandise fabric, texture and
function. Each telemarketing associate utilizes a terminal with access to an IBM
mainframe computer which houses complete and up-to-date product and order
information. The fulfillment operations are designed to process and ship
customer orders in a quick and cost-effective manner. Orders placed before 9:00
p.m. are shipped the following day. Same-day shipping is available for orders
placed before noon.

J. Crew Factory Outlets

The Company extends its reach to additional consumers through its 41 J. Crew
Factory Outlets. Offering J. Crew products at an average of 30% below full
retail prices, J. Crew Factory Outlets target value-oriented consumers. The
factory outlet stores also serve to liquidate excess, irregular or out-of-season
J. Crew products outside of the Company's three primary distribution channels.
During fiscal 2000, J. Crew Factory Outlets generated net sales of $96.1
million, representing 12.2% of the Company's total J. Crew brand net sales.

J. Crew Factory Outlets offer selections of J. Crew menswear and womenswear.
Ranging in size from 3,500 to 10,000 square feet with an average of 6,500 square
feet, the stores are generally located in major outlet centers in 25 states
across the United States. The Company believes that the outlet stores, which are
designed in-house, maintain fixturing, visual presentation and service standards
superior to those typically associated with outlet stores.

Trademarks and International Licensing

J. Crew International, Inc., an indirect subsidiary of J. Crew Group, Inc.,
currently owns all of the trademarks and domain names for the J. Crew name that
the Company holds throughout the world, as well as its international licensing
contracts with third parties.

The Company derives revenues from the international licensing of its trademarks
in the J. Crew name and the know-how it has developed. The Company has a
licensing agreement with Itochu Corporation in Japan which gives the Company the
right to receive payments of percentage royalty fees in exchange for the
exclusive right to use the Company's trademarks in Japan. Under the license
agreement the Company retains a high degree of control over the manufacture,
design, marketing and sale of merchandise under the J. Crew trademarks. This
agreement expires in January, 2003. In 2000, licensing revenues totaled $3.0
million.

Employees

The Company focuses significant resources on the selection and training of sales
associates in both its mail order, retail and factory operations. Sales
associates are required to be familiar with the full range of merchandise of the
business in which they are working and have the ability to assist customers with
merchandise selection. Both retail and factory store management are compensated
in a combination of annual salary plus performance-based bonuses. Retail,
telemarketing and factory associates are compensated on an hourly basis and may
earn team-based performance incentives.

                                       6
<PAGE>

At February 3, 2001 the Company had approximately 5,600 associates, of whom
approximately 3,500 were full-time associates and 2,100 were part-time
associates. In addition, approximately 2,000 associates are hired on a seasonal
basis to meet demand during the peak holiday buying season. None of the
associates employed by J. Crew are represented by a union. The Company believes
that its relationship with its associates is good.

Competition

All aspects of the Company's businesses are highly competitive. The Company
competes primarily with specialty brand retailers, other catalog operations,
department stores, and mass merchandisers engaged in the retail sale of men's
and women's apparel, accessories, footwear and general merchandise. The Company
believes that the principal bases upon which it competes are quality, design,
efficient service, selection and price.

                                       7
<PAGE>

ITEM 2.  PROPERTIES

The Company is headquartered in New York City. The New York City headquarters'
offices are leased under a lease agreement expiring in 2012 (not including
renewal options). The Company owns two telemarketing and distribution
facilities: a 406,500-square-foot telemarketing and distribution center for J.
Crew Direct operations in Lynchburg, Virginia and a 192,500-square-foot
telemarketing and distribution center in Asheville, North Carolina servicing the
J. Crew Retail operations.

As of February 3, 2001, the Company operated 105 J. Crew retail stores and 41
factory outlet stores in 36 states and the District of Columbia. All of the
retail and factory outlet stores are leased from third parties, and the leases
in most cases have terms of 10 to 12 years, not including renewal options. As a
general matter, the leases contain standard provisions concerning the payment of
rent, events of default and the rights and obligations of each party. Rent due
under the leases is comprised of annual base rent plus a contingent rent payment
based on the store's sales in excess of a specified threshold. Substantially all
the leases are guaranteed by the Company.

The table below sets forth the number of stores by state operated by the Company
in the United States as of February 3, 2001.

<TABLE>
<CAPTION>
                                              Total
                                              -----
                         Retail    Outlet     Number
                         ------    ------     ------
                         Stores    Stores     Of Stores
                         ------    ------     ---------
<S>                      <C>       <C>        <C>

Alabama                     1         1          2
Arizona                     2        --          2
California                 17         3         20
Colorado                    3         2          5
Connecticut                 4         1          5
Delaware                    1         1          2
Florida                     4         3          7
Georgia                     3         2          5
Illinois                    6        --          6
Indiana                     1         2          3
Kansas                      1        --          1
Kentucky                    1        --          1
Louisiana                   1        --          1
Maine                      --         2          2
Maryland                    2         1          3
Massachusetts               6         1          7
Michigan                    3         1          4
Minnesota                   2        --          2
Missouri                    1         1          2
Nevada                      1         1          2
New Hampshire              --         2          2
New Jersey                  4         1          5
New Mexico                  1        --          1
New York                   11         4         15
North Carolina              2        --          2
Ohio                        4        --          4
Oregon                      2        --          2
Pennsylvania                3         3          6
Rhode Island                1         -          1
South Carolina              1         2          3
Tennessee                   2         1          3
Texas                       6         2          8
Vermont                    --         1          1
Virginia                    4         1          5
Washington                  2         1          3
Wisconsin                   1         1          2
District of Columbia        1        --          1
                          ---        --        ---

Total.                    105        41        146
                          ===        ==        ===
</TABLE>

                                       8
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

         Routine litigation is pending against the Company with respect to
matters incidental to its business. Although the outcome of litigation cannot be
predicted with certainty, in the opinion of the Company none of those actions
should have a material adverse effect on the consolidated financial position or
results of operations of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter ended
February 3, 2001.

                                       9
<PAGE>

                                    PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

There is no established public trading market for Holdings Common Stock. As of
March 7, 2001, there were 38 shareholders of record of the Common Stock. See
"Item 12. Security Ownership of Certain Beneficial Owners and Management" for a
discussion of the ownership of Holdings.

Holdings has not paid cash dividends on its Common Stock and does not anticipate
paying any such dividends in the foreseeable future.

The credit agreement (the "Credit Agreement") and the Indenture relating to the
Senior Discount Debentures (the "Holdings Indenture") prohibit the payment of
dividends by Holdings on shares of Common Stock (other than dividends payable
solely in shares of capital stock of Holdings). Additionally, because Holdings
is a holding company, its ability to pay dividends is dependent upon the receipt
of dividends from its direct and indirect subsidiaries. Each of the Credit
Agreement, the Holdings Indenture and the Indenture relating to the Senior
Subordinated Notes of J. Crew Operating Corp., a wholly owned subsidiary of
Holdings ("Operating Corp."), contains covenants which impose substantial
restrictions on Operating Corp's ability to pay dividends or make distributions
to Holdings.

The Directors of Holdings have the right to receive all or a portion of the fees
for their services as a Director in Common Stock. In fiscal year 2000, certain
Directors elected to receive a total of 16,400 shares of Common Stock in payment
of their fees, at a purchase price of $10.00 per share. Holdings issued the
Common Stock to the Directors in transactions which did not involve any public
offering in reliance upon Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act").


ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth selected consolidated historical financial,
operating, balance sheet and other data of the Company. The selected income
statement and balance sheet data for the fiscal year ended January 31, 1997 are
derived from the Consolidated Financial Statements of the Company, which have
been audited by Deloitte & Touche LLP, independent auditors. The selected income
statement and balance sheet data for each of the four fiscal years ended
February 3, 2001 are derived from the Consolidated Financial Statements of the
Company, which have been audited by KPMG LLP, independent auditors. The data
presented below should be read in conjunction with the Consolidated Financial
Statements, including the related Notes thereto, included herein, the other
financial information included herein, and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>

                                                                                   Fiscal Year Ended
                                                       January 31,   January 31,      January 30,     January 29,   February 3,
                                                       ----------    ----------       ----------      ----------    ----------
                                                          1997          1998             1999            2000           2001
                                                          ----          ----             ----            ----           ----
                                                                      (dollars in thousands, except per square foot data)
<S>                                                   <C>           <C>              <C>             <C>           <C>
Income Statement Data:
  Revenues                                             $854,728      $ 881,044        $ 870,842       $ 750,696     $ 825,975
  Cost of goods sold(a)                                 480,539        517,378          511,716         431,193       463,909
  Selling, general and administrative                   342,370        354,614          332,050         279,302       301,865
    expenses
  Other charges                                              --             --            7,995           7,018            --
  Charges incurred in connection with
    discontinuance of Clifford &Wills                        --             --           13,300           4,000         4,130
  Income from operations                                 31,819          9,052            5,781          29,183        56,071
  Interest expense-net                                   10,470         20,494           39,323          38,861        36,642
  Gain on sale of Popular Club Plan                         ---            ---          (10,000)         (1,000)           --
  Expenses incurred-Recapitalization                         --         20,707               --             ---            --
  Provision (benefit) for income taxes                    8,800         (5,262)          (8,162)         (2,050)        7,500
  Extraordinary items and cumulative effect
  of accounting changes, net of taxes                        --         (4,500)              --              --            --
                                                       --------      ---------        ---------       ---------     ---------
  Net income (loss)                                    $ 12,549      $ (31,387)       $ (15,380)      $  (6,628)    $  11,929
                                                       ========      =========        =========       =========     =========
</TABLE>


                                       10
<PAGE>

<TABLE>
<CAPTION>

                                                                                   Fiscal Year Ended

                                                       January 31,   January 31,         January 30,   January 29,   February 3,
                                                              1997          1998                1999          2000          2001
<S>                                                      <C>          <C>                 <C>           <C>           <C>
Balance Sheet Data (at period end):
 Cash and cash equivalents                                $  7,132     $  12,166           $   9,643     $  38,693     $  32,930
 Working capital                                           132,222       142,677              95,710        75,929        49,482
 Total assets                                              410,821       421,878             376,330       373,604       389,861
 Total long term debt and redeemable
 preferred stock                                            87,092       428,457             433,243       458,218       464,310
 Stockholders' equity (deficit)                            102,006      (201,642)           (235,773)     (264,593)     (278,347)

Operating Data:
Revenues:
J. Crew retail                                            $167,957     $ 209,559           $ 273,972     $ 333,575     $ 406,784
J. Crew direct
     Catalog                                               289,773       260,853             230,752       213,308       177,535
     Internet                                                   --         4,000              22,000        65,249       107,225
                                                          --------     ---------           ---------     ---------     ---------
                                                           289,773       264,853             252,752       278,557       284,760
                                                          --------     ---------           ---------     ---------     ---------


J. Crew factory outlet                                      94,579       100,285              96,461       101,987        96,114
J. Crew licensing                                            3,817         2,897               2,712         2,505         3,020
J. Crew shipping & handling fees                            27,592        28,936              30,575        34,072        35,297
                                                          --------     ---------           ---------     ---------     ---------

Total J. Crew brand                                        583,718       606,530             656,472       750,696       825,975
Other divisions(b)                                         271,010       274,514             214,370            --           ---
                                                          --------     ---------           ---------     ---------     ---------

Total                                                     $854,728     $ 881,044           $ 870,842     $ 750,696     $ 825,975
                                                          ========     =========           =========     =========     =========

J. Crew Direct:

Number of catalogs circulated (in                           76,087        76,994              73,440        75,479        72,522
thousands)
Number of pages circulated (in millions)                     9,827         9,830               8,819         9,319         8,677

J. Crew Retail:

Sales per  gross square foot(c)                           $    551     $     542           $     558     $     571     $     567
Store contribution margin(c)                                  25.4%         23.4%               25.0%         26.0%         23.9%
Number of stores open at end of period                          39            51                  65            81           105
Comparable store sales change(c)                               4.5%         (6.6)%               9.0%          1.8%          1.7%

Depreciation and amortization                             $ 10,541     $  15,255           $  15,972     $  19,241     $  22,600

Net capital expenditures(d)
New store openings                                        $ 10,894     $  19,802           $  14,749     $  13,300     $  16,700
Other                                                       11,587        11,565              21,605        27,953        25,475
                                                          --------     ---------           ---------     ---------     ---------

Total net capital expenditures                            $ 22,481     $  31,367           $  36,354     $  41,253     $  42,175
                                                          ========     =========           =========     =========     =========
</TABLE>

(a) Includes buying and occupancy costs.
(b) Includes revenues from the Company's PCP and C&W divisions and finance
    charge income from PCP installment sales. PCP was sold effective October 30,
    1998 and the Company made a decision in 1998 to exit the catalog and outlet
    store operations of C&W.
(c) Includes stores that have been opened for a full twelve month period.
(d) Capital expenditures are net of proceeds from construction allowances.

                                       11
<PAGE>

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

This discussion summarizes the significant factors affecting the consolidated
operating results, financial condition and liquidity of the Company during the
three-year period ended February 3, 2001. This discussion should be read in
conjunction with the audited consolidated financial statements of the Company
for the three-year period ended February 3, 2001 and notes thereto included
elsewhere in this Annual Report on Form 10-K.

Results of Operations

Consolidated statements of operations presented as a percentage of revenues are
as follows:

<TABLE>
<CAPTION>

                                                                        Fiscal year ended
                                                             February 3,   January 29,   January 30,
                                                                 2001         2000          1999
<S>                                                             <C>          <C>           <C>
Revenues                                                         100.0%       100.0%        100.0%
Cost of goods sold, including buying and occupancy costs          56.2         57.4          58.8
Selling, general and administrative expenses                      36.5         37.2          38.1
Other charges                                                       --           .9            .9
Charges incurred in connection with discontinuance of C&W           .5           .5           1.5
Income from operations                                             6.8          3.9            .7
Interest expense, net                                             (4.4)        (5.2)         (4.5)
Gain on the sale of Popular Club Plan                               --           .1           1.1
Income/(loss) before income taxes                                  2.4         (1.2)         (2.7)
Income taxes                                                       (.9)          .3            .9
                                                                 -----        -----         -----
Net income/(loss)                                                  1.5%         (.9)%        (1.8)%
                                                                 =====        =====         =====
</TABLE>

Fiscal 2000  Compared to Fiscal 1999

Revenues
--------

Revenues increased 10.0% to $826.0 million in the fiscal year ended February 3,
2001 from $750.7 million in the fiscal year ended January 29, 2000. The fiscal
year ended February 3, 2001 consisted of 53 weeks compared to 52 weeks in the
prior year. Net sales for the fifty-third week were $10.8 million. The increase
in revenues was due primarily to the increase of $73.2 million in the net sales
for J.Crew Retail.

J. Crew Retail net sales increased by 21.9% from $333.6 million in fiscal 1999
to $406.8 million in fiscal 2000. The percentage of the Company's total net
sales derived from J. Crew Retail increased to 51.6% in fiscal year 2000
compared to 46.7% in fiscal 1999. This increase was attributed primarily to net
sales from stores not opened for a full fiscal year. Comparable store sales
increased by 1.7% in fiscal 2000. The number of stores opened at February 3,
2001 increased to 105 from 81 at January 29, 2000.

J. Crew Direct net sales (which includes net sales from catalog and internet
operations) increased by 2.2% from $278.6 million in fiscal 1999 to $284.8
million in fiscal 2000. The percentage of the Company's total net sales derived
from J. Crew Direct decreased to 36.2% in fiscal 2000 from 39.0% in fiscal 1999.
Catalog net sales decreased to $177.5 million in fiscal 2000 from $213.3 million
in fiscal 1999. Internet net sales increased to $107.3 million in fiscal 2000
from $65.3 million in fiscal 1999 as the Company continued to migrate catalog
customers to the Internet.

                                       12
<PAGE>

J.Crew Factory Outlet net sales decreased by 5.8% from $102.0 million in fiscal
1999 to $96.1 million in fiscal 2000. The percentage of the Company's total net
sales derived from J. Crew Factory Outlet decreased to 12.2% in fiscal 2000 from
14.3% in fiscal 1999. Comparable store sales for J. Crew Factory Outlet
decreased by 2.9% in fiscal 2000. J. Crew Factory Outlet closed one store in
fiscal 2000 and 41 stores were open at February 3, 2001.

Other revenues which consist of shipping and handling fees and royalties
increased from $36.6 million to $38.3 million, primarily as a result of an
increase in shipping and handling fees.

Cost of sales, including buying and occupancy costs
---------------------------------------------------

Cost of sales, including buying and occupancy costs as a percentage of revenues
decreased to 56.2% in fiscal 2000 from 57.4% in fiscal 1999. This decrease was
caused primarily by an increase in initial mark up due to a decrease in the cost
of merchandise and an improvement in inventory mix in our factory division.

Selling, general and administrative expenses
--------------------------------------------

Selling, general and administrative expenses increased to $301.9 million in
fiscal 2000 (36.6% of revenues) from $279.3 million in fiscal 1999 (37.2% of
revenues).

General and administrative expenses of the J.Crew brand increased to $239.2
million in fiscal 2000 (29.0% of revenues) from $203.6 million in fiscal 1999
(27.1% of revenues). This increase resulted primarily from (a) an increase in
the expenses attributable to the increased number of retail stores in operation
during fiscal 2000 compared to fiscal 1999 and (b) an increase in bonus
provision in fiscal 2000 as a result of the increase in operating income.

Selling expenses were $62.7 million in fiscal 2000 (7.6% of revenues) compared
to $75.7 million in fiscal 1999 (10.1% of revenues). This decrease was due
primarily to $6.0 million of direct advertising related to the Internet that was
incurred in fiscal 1999, a decrease in pages circulated from 9.3 billion pages
in fiscal 1999 to 8.7 billion pages in fiscal year 2000 and catalog production
efficiencies.

Write-down of assets and other charges in connection with the discontinuance of
-------------------------------------------------------------------------------
Clifford & Wills
----------------

An additional charge of $4.1 million was incurred in fiscal 2000 to write off
the remaining balance of the net assets of Clifford & Wills, primarily
inventories.

Interest expense
----------------

Interest expense, net decreased to $ 36.6 million in fiscal 2000 from $38.9
million in fiscal 1999. This decrease resulted from lower average borrowings
during fiscal 2000 under the Revolving Credit Facility and the reduced term loan
balance offset by higher non-cash interest. Average borrowings under the
Revolving Credit Facility required to fund inventories and capital expenditures
were $9.8 million in fiscal 2000 compared to $30.8 million in fiscal 1999.

Interest expense included non-cash interest and amortization of deferred
financing costs of $16.4 million in fiscal 2000 compared to $14.2 million in
fiscal 1999.

Income Taxes
------------

The effective tax rate was 38.6% in fiscal 2000 compared to (23.6%) in fiscal
1999. The effective tax rate in 1999 was less than the normal rate due primarily
to the inability of certain subsidiaries to deduct net operating losses for
state tax purposes.

                                       13
<PAGE>

Fiscal 1999 Compared to Fiscal 1998

Revenues
--------

Revenues decreased 13.8% to $750.7 million in the fiscal year ended January 29,
2000 from $870.8 million in the fiscal year ended January 30, 1999. The decrease
in revenues was attributable to the sale of Popular Club Plan, effective as of
October 30, 1998, and the discontinuance of Clifford & Wills operations which
resulted in a decrease of $214.4 million. This decrease was offset by increases
of $59.6 million in J. Crew Retail and $25.8 million in J.Crew Direct. Excluding
Popular Club Plan and Clifford & Wills, revenues increased 14.3% from $656.5
million in fiscal 1998 to $750.7 million in fiscal 1999.

J. Crew Retail net sales increased by 21.8% from $274.0 million in fiscal 1998
to $333.6 million in fiscal 1999. The percentage of the Company's total net
sales derived from J. Crew Retail increased to 46.6% in fiscal year 1999
compared to 33.2% in fiscal 1998. This increase was attributed to $54.6 million
from the opening of new stores and $5.0 million from an increase in comparable
store sales of 1.8%. The number of stores open at January 29, 2000 increased to
81 from 65 at January 30, 1999.

J. Crew Direct net sales (which includes net sales from catalog and internet
operations) increased by 10.2% from $252.8 million in fiscal 1998 to $278.6
million in fiscal 1999. The percentage of the Company's total net sales derived
from J. Crew Direct increased to 38.9% in fiscal 1999 from 30.7% in fiscal 1998.
This increase was primarily due to an increase in net sales from j.crew.com
which increased to $65.2 million fiscal 1999 from $21.6 million in fiscal
1998.Catalog net sales decreased to $213.4 million in fiscal 1999 from $231.2
million in fiscal 1998 as the Company adopted initiatives to migrate catalog
customers to the Internet.

J. Crew Factory Outlet net sales increased by 5.7% from $96.5 million in fiscal
1998 to $102.0 million in fiscal 1999. The percentage of the Company's total net
sales derived from J. Crew Factory Outlet increased to 14.2% in fiscal 1999 from
11.7% in fiscal 1998. Comparable store sales for J. Crew Factory Outlet
increased by 3.8% in fiscal 1999. J. Crew Factory Outlet closed three stores in
fiscal 1999 and 42 stores were open at January 29, 2000.

Other revenues consist of shipping and handling fees and royalties in fiscal
1999 and 1998. Fiscal 1998 also included finance charge income related to
Popular Club Plan. The decrease in fiscal 1999 compared to fiscal 1998 was due
to the sale of Popular Club Plan in October 1998.

Cost of sales, including buying and occupancy costs
---------------------------------------------------

Cost of sales, including buying and occupancy costs as a percentage of revenues
decreased to 57.4% in fiscal 1999 compared to 58.8% in fiscal 1998. Excluding
the operations of PCP and C&W cost of sales including buying and occupancy costs
decreased to 57.4% in fiscal 1999 from 58.6% in fiscal 1998. This decrease was
caused primarily by an increase in initial mark up caused by a decrease in the
cost of merchandise.

Selling, general and administrative expenses
--------------------------------------------

Selling, general and administrative expenses decreased to $279.3 million in
fiscal 1999 (37.2% of revenues) from $332.1 million in fiscal 1998 (38.1% of
revenues). Approximately $92.1 million of selling, general, and administrative
expenses in fiscal 1998 resulted from the operations of PCP and C&W.

Selling, general and administrative expenses of the J.Crew brand increased to
$279.3 million in fiscal 1999 (37.2% of revenues) from $239.9 million in fiscal
1998 (36.5% of revenues). This increase resulted primarily from an increase in
general and administrative expenses of $31.5 million due to (a) an increase in
the number of retail stores in operation during fiscal 1999 compared to fiscal
1998; (b) an increase in consulting fees and other expenses attributable to
information technology initiatives; and (c) an increase in marketing expenses of
approximately $8 million, primarily direct advertising, devoted to increasing
customer awareness of the Company's Internet site.

                                       14
<PAGE>

Selling expenses were $75.7 million in fiscal 1999 (10.1% of revenues) compared
to $67.8 million in fiscal 1998 (10.3% of revenues).  This increase was due to
$6.0 million of direct advertising related to the Internet and an increase in
pages circulated from 8.8 billion pages in fiscal 1998 to 9.3 billion pages in
fiscal year 1999, an increase of 5.7%. These increases in selling expenses were
partially offset by decreases related to efficiencies in the catalog production
process.

Write-down of assets and other charges in connection with the discontinuance of
-------------------------------------------------------------------------------
Clifford & Wills
----------------

An additional charge of $4.0 million was incurred in fiscal 1999 to write down
the carrying value of inventories to net realizable value. (See note 3 to the
consolidated financial statements).

Other charges
-------------

Other charges in fiscal 1999 include $7.0 million relating to the write off of
certain software development costs which were impaired by the decision of the
Company to adopt an enterprise resource planning system for its future
information technology requirements.

Gain on sale of subsidiary
--------------------------

An additional gain of $1.0 million was recognized in fiscal 1999 from a
reduction in certain estimated liabilities established at the time of sale.(See
note 3 to the consolidated financial statements).

Interest expense
----------------

Interest expense, net decreased to $38.9 million in fiscal 1999 from $39.3
million in fiscal 1998. This decrease resulted primarily from lower average
borrowings during fiscal 1999 under the Revolving Credit Facility and the
reduced term loan balances which was offset by higher non-cash interest and
interest related to the settlement of a sales and use tax assessment. Average
borrowings under a Revolving Credit Facility required to fund inventories and
capital expenditures were $30.8 million in fiscal 1999 and $47.5 million in
fiscal 1998.

Interest expense included non-cash interest and amortization of deferred
financing costs of $14.2 million in fiscal 1999 compared to $12.7 million fiscal
1998.

Income Taxes
------------

The effective tax rate was (23.6%) in fiscal 1999 compared to (34.7)% in fiscal
1998.  The decrease in the effective tax rate in 1999 was primarily due to the
inability of certain subsidiaries to deduct net operating losses for state tax
purposes.

Liquidity and Capital Resources

The Company's primary cash needs have been for capital expenditures incurred
primarily for opening new stores and system enhancements, debt service
requirements and working capital. The Company's sources of liquidity have been
primarily cash flows from operations and borrowings under the revolving credit
facility.

Cash provided by operating activities was $70.3 million in fiscal 2000 compared
to $94.1 million in fiscal 1999.  The decrease in cash provided by operations
resulted from (a) an increase in the change in inventories of $36.8 million and
(b) a decrease in the change in prepaid expenses and other current assets of
$10.3 million offset by an increase in net income  of $18.6 million.

Capital expenditures, net of construction allowances, were $42.2 million in
fiscal 2000 which consisted primarily of the opening of 24 new J. Crew retail
stores and for systems enhancements, primarily the SAP enterprise resource
planning system.  Capital expenditures in fiscal 1999 were $41.3 million and
consisted primarily from the opening of 16 new J.Crew Retail Stores and for
system enhancements.

                                       15
<PAGE>

Capital expenditures are expected to be approximately $50.0 million in fiscal
2001, primarily for the opening of at least 30 J. Crew retail stores and system
enhancements. The expected capital expenditures will be funded from internally
generated cash flows and by borrowings from available financing sources.

The Company repaid the $34.0 million outstanding balance of its term loan during
fiscal 2000.  There are no scheduled principal payments of the Company's long
term debt during the next five years.  There were no borrowings under the
Revolving Credit Facility at February 3, 2001 and January 29, 2000.  Average
borrowings under the Revolving Credit Facility were $9.8 million for the fiscal
year ended February 3, 2001 and $30.8 million for the fiscal year ended January
29, 2000.

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.

Impact of Inflation

The Company's results of operations and financial condition are presented based
upon historical cost. While it is difficult to accurately measure the impact of
inflation due to the imprecise nature of the estimates required, the Company
believes that the effects of inflation, if any, on its results of operations and
financial condition have been minor. However, there can be no assurance that
during a period of significant inflation, the Company's results of operations
would not be adversely affected.

Seasonality

The Company's retail and direct businesses experience 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 2000 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.

Recent Accounting Pronouncements

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" and No. 138 "Accounting for Certain Derivative Instruments and
Certain Hedging Activities" which require entities to recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. SFAS No. 133, as amended and SFAS No.
138 are effective for all fiscal years beginning after June 15, 2000. The
Company will adopt these standards in fiscal year 2001.  Due to its limited use
of derivative instruments, the Company does not expect the adoption of these
standards to have a material effect on its consolidated financial positions or
results of operations.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's principal market risk relates to interest rate sensitivity, which
is the risk the future changes in interest rates will reduce net income or the
net assets of the Company.  The Company's variable rate debt consists of
borrowings under the Revolving Credit Facility and the Term Loan Facility.  In
order to manage this interest rate risk, the Company entered into an interest
rate swap agreement in October 1997, which converted the variable interest rate
for $50 million of debt to a fixed rate of 6.23%.  The swap agreement expired in
October 2000 and was not renewed because the Company's exposure under the
Revolving Credit Facility and Term Loan Facility have been substantially
reduced.

                                       16
<PAGE>

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 February 3, 2001 were approximately
$50.9 million.

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 from time to time entered into forward foreign exchange contracts to
minimize this risk. At February 3, 2001, there were no forward foreign exchange
contracts outstanding.

                                       17
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements are set forth herein commencing on page F-1 of this
Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

Not applicable.


                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the name, age and position of individuals who are
serving as directors of Holdings and executive officers of Holdings and
Operating Corp. Each Director of Holdings will hold office until the next annual
meeting of shareholders or until his or her successor has been elected and
qualified. Officers are elected by the respective Boards of Directors and serve
at the discretion of such Board.
<TABLE>
<CAPTION>

Name                                   Age           Position
----                                   ---           --------
<S>                                  <C>           <C>

Emily Woods............................39            Director, Chairman of the Board
Mark A. Sarvary........................41            Director, Chief Executive Officer
Charlotte L. Beers.....................65            Director
David Bonderman........................58            Director
Richard W. Boyce.......................46            Director
Gregory D. Brenneman...................39            Director
John W. Burden, III....................64            Director
James G. Coulter.......................41            Director
Barbara K. Eisenberg...................55            Senior Vice President, General Counsel and Corporate Secretary
Scott Formby...........................39            Executive Vice President, Design
Scott D. Hyatt.........................43            Senior Vice President, Manufacturing
Walter Killough........................46            Chief Operating Officer
David F. Kozel.........................45            Senior Vice President, Human Resources
Nicholas Lamberti......................58            Vice President, Corporate Controller
Scott M. Rosen.........................42            Executive Vice President, Chief Financial Officer
Carol Sharpe...........................46            Executive Vice President, Merchandising - Brand
Trudy Sullivan.........................51            President
Brian T. Swette........................47            Director
Josh S. Weston.........................72            Director
</TABLE>

                                       18
<PAGE>

Emily Woods
     Ms. Woods became Chairman of the Board of Directors of Holdings in 1997.
Ms. Woods is also a director and Chairman of the Board of Operating Corp.  Ms.
Woods co-founded the J. Crew brand in 1983.  Ms. Woods has also served as Chief
Executive Officer and Vice-Chairman of Holdings and as Chief Executive Officer
of Operating Corp.  She is also a director of Yankee Candle Company, Inc.

Mark A. Sarvary
     Mr. Sarvary has been Chief Executive Officer and a Director of the Company
since May 1999. He was President/General Manager of the Nestle Frozen Food
Division of Nestle USA from 1996 to 1999.

Charlotte L. Beers
     Ms. Beers became a director of Holdings in 1998.  Ms. Beers was Chairman of
J. Walter Thompson (advertising agency) from 1999 until February 2001.  She was
Chairman and Chief Executive Officer of Ogilvy & Mather (advertising agency)
from 1992 until 1997 and Chairman Emeritus from 1997 until March 1999.  She also
serves as a director of Martha Stewart Living Omnimedia, Inc. and IBeauty.com.

David Bonderman
     Mr. Bonderman became a director of Holdings in 1997.  Mr. Bonderman is a
founding partner of Texas Pacific Group and has been Managing General Partner of
TPG for more than eight years.  Mr. Bonderman serves on the Boards of Directors
of Bell & Howell, Inc., Continental Airlines, Inc., Co-Star Realty Information,
Inc., Denbury Resources Inc., Ducati Motor Holdings S.p.A., Magellan Health
Services, Inc., Oxford Health Plans, Inc., Paradyne Networks, Inc., RyanAir
Holdings PLC., ON Semiconductor Corporation, Washington Mutual, Inc.,
Urogenesys, Inc. and Seagate Technology, Inc.

Richard W. Boyce
     Mr. Boyce became a director of Holdings in 1997 and served as Chief
Executive Officer of the Company during portions of 1997 and 1999 while also
providing operating oversight to the remainder of the TPG portfolio.  Mr. Boyce
is the senior operating partner of Texas Pacific Group.  Prior to joining Texas
Pacific Group in 1997, Mr. Boyce was employed by PepsiCo for more than five
years prior thereto, most recently as Senior Vice President of Operations for
Pepsi-Cola, North America.  He was Chairman of Favorite Brands International
Holding Corp., which filed for protection under Chapter 11 of the Bankruptcy
Code in 1999.  Mr. Boyce also serves on the Boards of Directors of Convergent
Communications, Del Monte Foods Corp. and ON Semiconductor Corporation.

Gregory D. Brenneman
     Mr. Brenneman became a director of Holdings in 1998. He has been President
of Continental Airlines Inc. ("Continental") since 1996 and Chief Operating
Officer of Continental since 1995.  He is a director of Continental and Home
Depot, Inc.

John W. Burden, III
     Mr. Burden became a director of Holdings in 1998. Mr. Burden has been a
retail consultant for more than five years. He also serves as a director of Saks
Incorporated and Chicos Fas Inc.

James G. Coulter
     Mr. Coulter became a director of Holdings in 1997.  Mr. Coulter is a
founding partner of Texas Pacific Group and has been Managing General Partner of
TPG for more than eight years.  Mr. Coulter serves on the Boards of Directors of
Genesis Health Ventures, Inc., Northwest Airlines, Inc., Oxford Health Plans,
Inc., ON Semiconductor Corporation, Globespan, Inc. and Seagate Technology, Inc.

                                       19
<PAGE>

Barbara K. Eisenberg
     Ms. Eisenberg has been Senior Vice President, General Counsel and Corporate
Secretary of the Company since 1999 and was Vice President, General Counsel and
Corporate Secretary from 1998 until then.  Prior thereto, she was Vice
President, Associate General Counsel and Corporate Secretary of Burlington
Industries, Inc. (textile manufacturer) for more than five years.

Scott Formby
     Mr. Formby has been Executive Vice President, Design of the Company since
1999. Prior thereto, he was Vice President, Design for more than five years.

Scott D. Hyatt
     Mr. Hyatt has been Senior Vice President, Manufacturing of the Company
since 1998. He was with Express Inc. as Vice President, Production and Sourcing
from 1996 to 1998.

Walter Killough
     Mr. Killough has been Chief Operating Officer of the Company since 1999.
He was Senior Vice President, General Manager, Mail Order from 1997 to 1999 and
prior thereto, he was Senior Vice President of Clifford & Wills, a subsidiary of
the Company, for more than five years.

David F. Kozel
     Mr. Kozel has been Senior Vice President, Human Resources of the Company
since 1999. Prior thereto, he was with Grey Advertising Inc. as Vice President,
Human Resources from 1998, Vice President, Human Resources of Deluxe Corporation
from 1997 to 1998 and Vice President, Human Resources of Citibank from 1995 to
1996.

Nicholas Lamberti
     Mr. Lamberti has been Vice President - Corporate Controller of the Company
for more than five years.

Scott M. Rosen
     Mr. Rosen has been Executive Vice President and Chief Financial Officer of
the Company since 1999, Senior Vice President and Chief Financial Officer from
1998 until then and Chief Financial Officer of Mail Order for more than five
years prior thereto.

Carol Sharpe
     Ms. Sharpe has been Executive Vice President, Merchandising - Brand of the
Company since 1999 and was Senior Vice President, General Merchandising Manager,
Retail prior thereto.  She was Senior Vice President and General Merchandising
Manager-Women's from 1998 until then and Vice President, Women's for more than 5
years prior to 1998.

Trudy Sullivan
     Ms. Sullivan has been President since rejoining the Company in 2000.  She
was President of Kids "R" Us, a division of Toys "R" Us, Inc., from October 1999
to February 2000. Ms. Sullivan was President, Mail Order of the Company from
1998 to 1999 and President of Clifford and Wills from 1995 to 1998.

Brian T. Swette
     Mr. Swette became a director of Holdings in 1998.  He has been Chief
Operating Officer of eBay Inc. (person-to-person trading community on the
Internet), since 1999 and from 1998 until then was Senior Vice President of
Marketing and International of eBay. He was Executive Vice President and Chief
Marketing Officer-Global Beverages of Pepsi-Cola Beverages from 1996 until
joining eBay Inc. and Executive Vice President Marketing-North America of Pepsi-
Cola Beverages from 1994 to 1996. He is also a director of eBay Inc.

                                       20
<PAGE>

Josh S. Weston
     Mr. Weston became a director of Holdings in 1998. He has been Honorary
Chairman of the Board of Directors of Automatic Data Processing (computing
services business) since 1998. He was Chairman of the Board of Automatic Data
Processing from 1996 until 1998 and Chairman and Chief Executive Officer for
more than five years prior thereto. Mr. Weston is also a director of Gentiva
Health Services, Inc., Aegis Communications Group, Inc. and Russ Berrie &
Company, Inc.

                                       21
<PAGE>

ITEM 11.      EXECUTIVE COMPENSATION

The following table sets forth compensation paid for fiscal years 2000, 1999,
and 1998 to each individual serving as its chief executive officer during fiscal
2000 and to each of the four other most highly compensated executive officers of
the Company as of the end of fiscal 2000.

<TABLE>
<CAPTION>
                                                                                              Long-Term Compensation
                                                           Annual Compensation               Awards           Payouts
                                                 -----------------------------------------------------------------------
                                                                                                   Securities
Name                                                                 Other Annual   Restricted    Underlying   LTIP      All Other
And                                       Fiscal  Salary    Bonus    Compensation     Stock        Options/   Payouts  Compensation
Principal Position                         Year    ($)      ($)          ($)       Award(s)($)(1)  SARS (#)(1)  ($)        ($)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>   <C>        <C>        <C>          <C>            <C>         <C>      <C>
Emily Woods                                2000 $1,000,000 $1,000,000 $         --          --         --       -- $       5,250 (5)
Chairman                                   1999  1,000,000  1,000,000           --          --         --       --         5,000 (5)
                                           1998  1,000,000  1,000,000           --          (2)        --       --  2,907,590 (3)(5)

Mark Sarvary                               2000    729,811    502,500           --          --         --       --         5,250 (5)
Chief Executive Officer                    1999    560,190    335,000  1,000,000(4)         --    272,000       --               --
                                           1998         --         --           --          --         --       --               --


Trudy Sullivan                             2000    420,315    375,000    275,000(4)         --     70,000       --         5,250 (5)
President                                  1999    329,231         --                       --         --       --         5,000 (5)
                                           1998    310,000    230,000           --          --   25,000(6)      --         5,000 (5)


Scott Formby                               2000    450,000    337,500           --          --     10,000       --         4,558 (5)
Executive Vice President, Design           1999    422,115    106,800           --          --      8,800       --         5,000 (5)
                                           1998    392,158    107,000           --          --         --       --         5,000 (5)


Carol Sharpe                               2000    400,000    360,000           --          --         --       --         5,250 (5)
Executive Vice President, Merchandising -
 Brand                                     1999    400,000    240,000    360,000(4)         --     12,000       --         5,000 (5)
                                           1998    362,500    100,300           --          --     12,400       --         5,000 (5)

</TABLE>

__________
(1)  There is no established public market for shares of Common Stock. Holders
     of restricted stock have the same right to receive dividends as other
     holders of Common Stock. The Company has not paid any cash dividends on its
     Common Stock.
(2)  Ms. Woods was granted 661,600 shares of Common Stock ("Woods Restricted
     Shares"), of which 78,600 shares vested immediately upon grant, 194,400
     shares will vest on October 17, 2000 and 2001 and 194,200 shares will vest
     on October 17, 2002.
(3)  The amount set forth in this column includes reimbursement for income taxes
     in the amount of $ 2,902,590 incurred by Ms. Woods as a result of the grant
     of the Woods Restricted Shares.
(4)  This amount is a signing bonus.
(5)  Represents Company matching contributions to 401(k) plan.
(6)  These options were forfeited when Ms. Sullivan left the Company in 1999.

                                       22
<PAGE>

The following Table shows information concerning stock options granted to any of
the named executive officers during fiscal year 2000.

                       Option Grants In Fiscal Year 2000
<TABLE>
<CAPTION>

                                                                               Assumed Annual Rates Of
                                                                             Stock Price Appreciation For
                            Individual Grants                                        Option Term
----------------------------------------------------------------------------------------------------------
                      Number of        Percent Of
                     Securities      Total Options
                     Underlying        Granted To
                       Options        Employees In    Exercise    Expiration
Name               Granted(#) (1)(2)  Fiscal Year    Price($/Sh)     Date       5%($)          10% ($)
----------------------------------------------------------------------------------------------------------
<S>                    <C>             <C>          <C>           <C>        <C>             <C>
Scott Formby            10,000           2.7%        $10.00        3/13/10     $62,900        $159,400

Trudy Sullivan          37,600          10.0%        $ 6.82        1/31/10    $161,300        $408,700
                        32,400           8.6%        $10.00        1/31/10    $203,800        $516,400
</TABLE>
__________
(1) The Company has not granted any SARs.

(2) The options have 10-year terms. Ms. Sullivan's option grant of 37,600 shares
    is exercisable 15,040 shares on the grant date and 20% on January 31st in
    each of 2001 through 2003. Ms. Sullivan's option grant of 32,400 shares is
    exercisable 20% on January 31st in each of 2001 through 2005. Mr. Formby's
    options are exercisable 20% on January 31st in each of 2001 through 2005.
    All unvested options become exercisable in the event of a change in control
    of Holdings.


    The following Table shows the number of stock options held by the named
executive officers at the end of fiscal year 2000. The named executive officers
did not exercise any stock options in fiscal year 2000.

      Aggregated Option Exercises in Fiscal Year 2001 and Fiscal Year-End Option
                                     Values

                                                      Number Of Securities
                                                     Underlying Unexercised
                                                  Options At Fiscal Year End (1)
                                                              (#)
Name                                                Exercisable/Unexercisable
----                                                -------------------------

Scott Formby........................................  24,240 /  25,760
Mark Sarvary........................................  54,400 / 217,600
Carol Sharpe........................................  17,400 /  19,600
Trudy Sullivan......................................  29,040 /  40,960
Emily Woods.........................................  98,400 / 393,800

__________
(1)  There is no established public market for shares of the Company's Common
     Stock.

                                       23
<PAGE>

Employment Agreements and Other Compensation Arrangements

Ms. Woods has an employment agreement with Holdings and Operating Corp. (the
"Employers") which provides that, for a period of five years beginning on
October 17, 1997, she will serve as Chairman of the Board of Directors of
Holdings. The employment agreement provides for an annual base salary of $1.0
million, and an annual target bonus of up to $1.0 million based on achievement
of earnings objectives to be determined each year. The employment agreement also
provided for the grant of 661,600 shares of Common Stock (the "Woods Restricted
Shares"). (See footnotes 2 and 3 to the Executive Compensation Table for
information on the vesting of the Woods Restricted Shares and the reimbursement
of income taxes incurred by Ms. Woods in connection with such grant.) Ms. Woods
is also entitled to various executive benefits and perquisites under the
employment agreement.

Under the terms of stock options awarded to Ms. Woods under the Company's Stock
Option Plan, all unvested options shall become exercisable (i) if Ms. Woods'
employment is terminated by Holdings without cause, by Ms. Woods for good reason
or by reason of death or disability, or (ii) in the event of a change in control
of Holdings. Because of a change in Ms. Woods' duties and responsibilities, upon
the termination of Ms. Woods' employment, she will be entitled to severance
benefits and other benefits as described in the February 4, 2000 amendment to
her agreement.

Mr. Sarvary has an Employment Agreement with Operating Corp., which provides
that, for a period of five years commencing on May 10, 1999, he will serve as
Chief Executive Officer of Operating Corp. The Employers also agreed to cause
Mr. Sarvary to be elected to the Board of Directors of Holdings. The Employment
Agreement provides for an annual base salary of $670,000 and an annual target
bonus of 50% of his annual base salary based on achievement of earnings
objectives to be determined each year. The Employment Agreement also provides
for the payment of a signing bonus of $1,000,000 and the grant of options to
purchase 272,000 shares of Common Stock as well as the grant of additional stock
options to purchase 68,000 shares on the earlier of the date of an initial
public offering of Holdings' Common Stock or May 10, 2004. Mr. Sarvary is also
entitled to various executive benefits and perquisites under the Employment
Agreement. Mr. Sarvary's Employment Agreement also provides that in the event of
his termination by Operating Corp. without Cause or termination by Mr. Sarvary
for Good Reason (as those terms are defined in the Employment Agreement), he
will receive an amount equal to two times his base salary.

Ms. Sullivan has an Employment Agreement with Operating Corp. which provides
that, for a period of three years commencing on February 27, 2000, she will
serve as President of Operating Corp. at an annual base salary of $500,000 and
an annual target bonus of 50% of her annual base salary based on achievement of
earnings objectives to be determined for each year. The Employment Agreement
also provides for a signing bonus of $275,000 and the grant of options to
purchase 70,000 shares of Common Stock. Ms. Sullivan is also entitled to various
executive benefits and perquisites under the Employment Agreement. Ms.
Sullivan's Employment Agreement also provides for continuation of her salary for
a period of one year if her employment is terminated by Operating Corp. without
Cause or if she terminates her employment for Good Reason (as those terms are
defined in the Employment Agreement).

Ms. Sharpe has an Employment Agreement with Operating Corp. which provides that,
for a period of five years commencing on April 30, 1999, she will serve as
Executive Vice President-Merchandising of Operating Corp. The Employment
Agreement provides for an annual base salary of $400,000 and an annual target
bonus of 60% of her annual base salary based on achievement of earnings
objectives to be determined for each year. The Employment Agreement also
provides for a signing bonus of $360,000 and the grant of options to purchase
12,000 shares of Common Stock. The Employment Agreement provides for
continuation of salary for a period of one year if Ms. Sharpe's employment is
terminated without Cause (as defined in the Agreement). Ms. Sharpe's Employment
Agreement also provides that if, on April 30, 2003, the aggregate spread between
the fair market value per share and the exercise price per share of her options
to purchase 34,600 shares of Holdings Common Stock does not equal or exceed
$1,124,500, then Operating Corp. will pay her a cash payment equal to any such
shortfall, subject to adjustment in the event she has disposed of any of the
shares underlying such options.

                                       24
<PAGE>

The Woods Restricted Shares and any shares of Common Stock acquired by Ms.
Woods, Mr. Sarvary and Ms. Sullivan and Sharpe pursuant to the exercise of
options are subject to a shareholders' agreement providing for certain transfer
restrictions, registration rights and customary tag-along and drag-along rights.


Compensation Committee Interlocks and Insider Participation

Ms. Woods, Chairman, and Mr. Boyce, a director and former Chief Executive
Officer of the Company, are members of the Compensation Committee of Holdings.

Compensation of Directors

An attendance fee of $10,000 for each Board of Directors meeting (up to a total
of $40,000 per year) is paid to each Director who is neither an employee of the
Company nor a representative of TPG. Directors have the option to receive all or
a portion of that fee paid in cash or in shares of Common Stock at a per share
purchase price equal to the fair market value thereof.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of
the Common Stock of Holdings as of March 7, 2001 for each person who is known to
Holdings to be the beneficial owner of 5% or more of Holdings Common Stock. The
holders listed have sole voting power and investment power over the shares held
by them, except as indicated by the notes following the table.

<TABLE>
<CAPTION>

                   Name and Address              Amount and Nature of     Percent of
Title of Class   of Beneficial Owner             Beneficial Ownership       Class
------------------------------------------------------------------------------------
<S>             <C>                             <C>                      <C>
Common Stock     TPG Partners II, L.P.           7,313,797.6 shares (1)        59%
                 301 Commerce Street, Suite 3300
                 Fort Worth, TX 76102

Common Stock     Emily Woods                     2,363,576.6 shares (2)        19%
                 J. Crew Group, Inc.
                 770 Broadway
                 New York, NY 10003
__________
</TABLE>

(1) These shares of Common Stock are held by TPG and the following affiliates of
    TPG (collectively, "TPG Affiliates"): TPG Parallel II L.P., TPG Partners II
    L.P. and TPG Investors II, L.P.

(2) Includes (a) 98,400 shares not currently owned but which are issuable upon
    the exercise of stock options awarded under the Company's Stock Option Plan
    that are currently exercisable, and (b) 388,600 shares of Common Stock that
    have not vested and are held in custody by the Company until vesting
    thereof.

                                       25
<PAGE>

     The following table sets forth information regarding the beneficial
ownership of each class of equity securities of Holdings as of March 7, 2001 for
(i) each director, (ii) each of the executive officers identified in the table
set forth under Item 11. "Executive Compensation", and (iii) all directors and
executive officers as a group. The holders listed have sole voting power and
investment power over the shares held by them, except as indicated by the notes
following the table.

<TABLE>
<CAPTION>

                                                             Number of Shares
                                                              and Nature of              Percent of
Title of Class             Name of Beneficial Owner       Beneficial Ownership              Class
----------------------------------------------------------------------------------------------------------
<S>                       <C>                                    <C>
Common Stock               Charlotte L. Beers                         16,466.276               *
Common Stock               David Bonderman                           7,313,797.6 (1)          59%
Common Stock               Richard W. Boyce                               55,200 (2)           *
Common Stock               Gregory D. Brenneman                           13,000               *
Common Stock               John W. Burden, III                         4,466.276               *
Common Stock               James G. Coulter                          7,313,797.6 (1)          59%
Common Stock               Scott Formby                                   24,240 (2)           *
Common Stock               Mark A. Sarvary                               108,800 (2)           *
Common Stock               Carol Sharpe                                   19,800 (2)           *
Common Stock               Trudy Sullivan                                 29,040 (2)
Common Stock               Brian T. Swette                            17,866.276               *
Common Stock               Josh S. Weston                             17,466.276               *
Common Stock               Emily Woods                               2,363,576.6 (3)          19%
Common Stock               All Directors and executive              10,079,439.3 (1) (2) (3)  81%
                           officers as a group
Series A Preferred Stock   Charlotte L. Beers                                 60               *
Series A Preferred Stock   David Bonderman                             73,474.58 (1)          79%
Series A Preferred Stock   Gregory D. Brenneman                               60               *
Series A Preferred Stock   James G. Coulter                            73,474.58 (1)          79%
Series A Preferred Stock   Brian T. Swette                                    60               *
Series A Preferred Stock   Josh S. Weston                                     60               *
Series A Preferred Stock   Emily Woods                                 2,978.505               3%
Series A Preferred Stock   All Directors and executive                76,753.085              83%
                           officers as a group
</TABLE>

__________
*Represents less than 1% of the class.

(1) Attributes ownership of the shares owned by TPG Affiliates to Messrs.
    Bonderman and Coulter, who are partners of TPG. Each of Messrs. Bonderman
    and Coulter disclaim beneficial ownership of the shares owned by TPG
    Affiliates.

(2) These are shares not currently owned but which are issuable upon the
    exercise of stock options awarded under the Company's Stock Option Plan that
    are currently exercisable or become exercisable within 60 days.

(3) Includes (a) 98,400 shares not currently owned but which are issuable upon
    the exercise of stock options awarded under the Company's Stock Option Plan
    that are currently exercisable, and (b) 388,600 shares of Common Stock that
    have not vested and are held in custody by the Company until vesting
    thereof.

                                       26
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In connection with Mr. Sarvary's relocation to the Company's headquarters,
the Company loaned Mr. Sarvary $1.0 million on an interest-free basis to
purchase a residence. The largest amount outstanding in fiscal year 2000 was
$950,000. The loan is secured by a mortgage on that residence and $900,000 is
still outstanding.

      Holdings and its subsidiaries entered into a tax sharing agreement
providing (among other things) that each of the subsidiaries will reimburse
Holdings for its share of income taxes determined as if such subsidiary had
filed its tax returns separately from Holdings. .

                                       27
<PAGE>

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)   1.  Financial Statements

          The following financial statements of J. Crew Group, Inc. and
          subsidiaries are included in Item 8:

          (i)   Report of KPMG LLP, Independent Auditors
          (ii)  Consolidated Balance Sheets as of  February 3, 2001 and January
                29, 2000
          (iii) Consolidated Statements of Operations - Years ended February 3,
                2001, January 29, 2000 and January 30, 1999
          (iv)  Consolidated Statements of changes in Stockholders' Deficit -
                Years ended February 3, 2001, January 29, 2000 and January 30,
                1999
          (v)   Consolidated Statements of Cash Flows - Years ended February 3,
                2001, January 29, 2000 and January 30, 1999
          (vi)  Notes to consolidated financial statements

     2.   Financial Statements Schedules

          Schedule II  Valuation and Qualifying Accounts.

     3.   Exhibits

          The exhibits listed on the accompanying Exhibit Index are incorporated
          by reference herein and filed as part of this report.

(b)  Reports on Form 8-K

     The Company has not filed any reports on Form 8-K during the fiscal quarter
     ended February 3, 2001.

(c)  Exhibits

     See Item 14(a)3 above.

(d)  Financial Statements Schedules

     See Item 14(a)1 and 14(a)2 above.

                                       28
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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 GROUP, INC.
Date: April 20, 2001
                                                   By: /s/ Mark A. Sarvary
                                                      --------------------
                                                   Mark A. Sarvary
                                                   Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on April 20, 2001.

          Signature                              Title
          ---------                              -----


     /s/ Emily Woods               Director; Chairman of the Board
     ---------------
     Emily Woods

     /s/ Mark A. Sarvary           Director; Chief Executive Officer
     -------------------           (Principal Executive Officer)
     Mark A. Sarvary

     /s/ Scott M. Rosen            Executive Vice President, Chief Financial
     ------------------            Officer (Principal Financial Officer)
     Scott M. Rosen

     /s/ Nicholas Lamberti         Vice President, Corporate Controller
     ---------------------         (Principal Accounting Officer)
     Nicholas Lamberti

     /s/ Charlotte L. Beers        Director
     ----------------------
     Charlotte L. Beers

     /s/ David Bonderman           Director
     -------------------
     David Bonderman

     /s/ Richard W. Boyce          Director
     --------------------
     Richard W. Boyce

     /s/ Gregory D. Brenneman      Director
     ------------------------
     Gregory D. Brenneman

     /s/ John W. Burden, III       Director
     -----------------------
     John W. Burden, III

     /s/ James G. Coulter          Director
     --------------------
     James G. Coulter

     /s/ Brian T. Swette           Director
     --------------------
     Brian T. Swette

     /s/ Josh S. Weston            Director
     ------------------
     Josh S. Weston

                                      S-1
<PAGE>

Independent Auditors' Report

The Board of Directors and Stockholders
J. Crew Group, Inc. and Subsidiaries:

We have audited the consolidated financial statements of J. Crew Group, Inc. and
subsidiaries (the "Company") as listed in the accompanying Index. In connection
with our audits of the consolidated financial statements, we also have audited
the financial statement schedule listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of J. Crew Group, Inc.
and subsidiaries as of February 3, 2001 and January 29, 2000 and the results of
their operations and their cash flows for each of the years in the three-year
period ended February 3, 2001, in conformity with  accounting principles
generally accepted in the United States of America. Also, in our opinion, the
related financial statement schedule when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects the information set forth therein.

                                              KPMG LLP

March 30, 2001

                                      F-1
<PAGE>

                            J. CREW GROUP, INC. AND
                                  SUBSIDIARIES

                          Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                         February 3,              January 29,
                         Assets                                             2001                     2000
                         ------                                             ----                     ----
                                                                                    (in thousands)
<S>                                                                     <C>                     <C>
Current assets:
     Cash and cash equivalents                                            $  32,930                $  38,693
     Merchandise inventories                                                140,667                  129,928
     Prepaid expenses and other current assets                               23,740                   30,083
     Net assets held for disposal                                                --                    8,927
                                                                          ---------                ---------

          Total current assets                                              197,337                  207,631
                                                                          ---------                ---------

Property and equipment - at cost:

     Land                                                                     1,460                    1,460
     Buildings and improvements                                              11,432                   11,363
     Furniture, fixtures and equipment                                       70,541                   60,355
     Leasehold improvements                                                 144,906                  130,054
     Construction in progress                                                22,983                   12,851
                                                                          ---------                ---------
                                                                            251,322                  216,083
          Less accumulated depreciation and amortization                     85,746                   77,683
                                                                          ---------                ---------
                                                                            165,576                  138,400
                                                                          ---------                ---------
Deferred income tax assets                                                   14,362                   14,830

Other assets                                                                 12,586                   12,743
                                                                          ---------                ---------

          Total assets                                                    $ 389,861                $ 373,604
                                                                          =========                =========

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

Current liabilities:
     Accounts payable                                                     $  49,705                $  40,951
     Other current liabilities                                               75,168                   70,222
     Federal and state income taxes payable                                  17,581                   14,687
     Deferred income tax liabilities                                          5,401                    5,842
                                                                          ---------                ---------

          Total current liabilities                                         147,855                  131,702
                                                                          ---------                ---------

Long-term debt                                                              264,292                  284,684
                                                                          ---------                ---------

Deferred credits and other long-term liabilities                             56,043                   48,277
                                                                          ---------                ---------

Redeemable preferred stock                                                  200,018                  173,534
                                                                          ---------                ---------

Stockholders' deficit                                                      (278,347)                (264,593)
                                                                          ---------                ---------

          Total liabilities and stockholders' deficit                     $ 389,861                $ 373,604
                                                                          =========                =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-2
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                     Consolidated Statements of Operations
<TABLE>
<CAPTION>
                                                                       Years ended
                                                                       -----------
                                                        February 3,   January 29,    January 30,
                                                        -----------  --------------  ------------
                                                             2001           2000          1999
                                                             ----           ----          ----
                                                                       (in thousands)
<S>                                                      <C>            <C>           <C>
Revenues:

 Net sales                                                 $787,658       $714,119      $816,221
 Other                                                       38,317         36,577        54,621
                                                           --------       --------      --------
                                                            825,975        750,696       870,842

Operating costs and expenses:

 Cost of goods sold, including buying and occupancy
  costs                                                     463,909        431,193       511,716
 Selling, general and administrative expenses               301,865        279,302       332,050
 Write off of software development costs                         --          7,018            --
 Write down of assets and other charges in
  connection with discontinuance of Clifford & Wills          4,130          4,000        13,300
 Termination costs and other nonrecurring
  employment contract charges                                    --              -         7,995
                                                           --------       --------      --------
                                                            769,904        721,513       865,061
                                                           --------       --------      --------

     Income from operations                                  56,071         29,183         5,781

Interest expense - net                                       36,642         38,861        39,323

Gain on sale of Popular Club Plan                                --         (1,000)      (10,000)
                                                           --------       --------      --------

     Income/(loss) before income taxes                       19,429         (8,678)      (23,542)

(Provision) benefit for income taxes                         (7,500)         2,050         8,162
                                                          ---------       --------      --------


     Net income/(loss)                                     $ 11,929       $ (6,628)     $(15,380)
                                                           ========       ========      ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

                            J. CREW GROUP, INC. AND
                                  SUBSIDIARIES
                     Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                  Years ended
                                                                                  -----------
                                                               February 3,         January 29,        January 30,
                                                              ------------       --------------      ------------
                                                                  2001                 2000              1999
                                                                --------             --------          --------
                                                                                  (in thousands)
<S>                                                           <C>                  <C>               <C>
Cash flows from operating activities:
Net income/(loss)                                               $ 11,929             $ (6,628)         $(15,380)
Adjustments to reconcile net income/(loss) to net cash
provided by operating activities:
  Depreciation and amortization                                   22,600               19,241            15,972
  Write off of software development costs                             --                7,018                --
  Amortization of deferred financing costs                         2,793                2,196             2,119
  Noncash interest expense                                        13,608               11,989            10,534
  Deferred income taxes                                               27               (6,840)          (10,129)
  Provision for losses on accounts receivable                         --                   --             5,627
  Noncash compensation expense                                       649                  636               881
  Gain on sale of subsidiary                                          --               (1,000)          (10,000)
  Write down of assets and other charges
  in connection with discontinued catalog                          4,130                4,000            15,000
Changes in operating assets and liabilities:
Accounts receivable                                                   --                   --            (8,242)
Merchandise inventories                                          (10,739)              26,094           (15,608)
Net assets held for disposal                                       4,797                4,450                --
Prepaid expenses and other current assets                          6,343               16,646              (536)
Other assets                                                      (2,788)                (777)           (2,559)
Accounts payable                                                   8,754                  821             7,415
Other liabilities                                                  5,263               12,892             1,931
Federal and state income taxes payable                             2,894                3,407            11,029
                                                                --------             --------          --------
  Net cash provided by operating activities                       70,260               94,145             8,054
                                                                --------             --------          --------

Cash flows from investing activities:
Capital expenditures                                             (55,694)             (48,684)          (41,177)
Proceeds from construction allowances                             13,519                7,431             4,823
Proceeds from sale of subsidiary, net of related expenses              -                   --            37,157
                                                                --------             --------          --------
  Net cash provided by (used in) investing activities            (42,175)             (41,253)              803
                                                                --------             --------          --------

Cash flows from financing activities:
(Decrease)/increase in notes payable, bank                            --              (14,000)           14,000
Repayment of long-term debt                                      (34,000)             (10,000)          (26,000)
Proceeds from the issuance of common stock                           178                  158               320
Proceeds from the issuance of redeemable preferred stock              --                   --               300
Repurchase of common stock                                           (26)                   -                --
                                                                --------             --------          --------
  Net cash used in financing activities                          (33,848)             (23,842)          (11,380)
                                                                --------             --------          --------

Increase (decrease) in cash and cash equivalents                  (5,763)              29,050            (2,523)

Cash and cash equivalents at beginning of year                    38,693                9,643            12,166
                                                                --------             --------          --------
Cash and cash equivalents at end of year                        $ 32,930             $ 38,693          $  9,643
                                                                ========             ========          ========

Supplementary cash flow information:
  Income taxes paid (refunded)                                  $  4,279             $ (7,570)         $   (515)
                                                                ========             ========          ========
  Interest paid                                                 $ 20,513             $ 24,792          $ 27,763
                                                                ========             ========          ========

Noncash financing activities:
  Dividends on redeemable preferred stock                       $ 26,484             $ 22,986          $ 19,952
                                                                ========             ========          ========
</TABLE>



See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                            J. CREW GROUP, INC. AND
                                  SUBSIDIARIES

          Consolidated Statements of Changes in Stockholders' Deficit

                         (in thousands, except shares)

<TABLE>
<CAPTION>
                                                                 Additional   Retained               Deferred      Stock-
                                               Common stock        paid-in    earnings    Treasury    compen-      holders'
                                               ------------
                                              Shares    Amount     capital    (Deficit)     stock      sation      deficit
                                              ------    ------     -------     -------      -----      ------      -------
<S>                                       <C>          <C>      <C>        <C>          <C>        <C>        <C>
Balance at January 31, 1998                 11,661,600     $ 1     $68,939   $(266,232)   $    --    $(4,350)   $(201,642)

Net loss                                            --      --          --     (15,380)        --         --      (15,380)

Issuance of common stock                        47,600      --         320          --         --         --          320

Preferred stock dividends                           --      --          --     (19,952)        --         --      (19,952)

Issuance of common stock pursuant
  to grant of restricted stock, net            487,400      --       1,120          --         --     (1,120)          --

Forfeiture of shares of restricted stock            --      --          --          --     (2,325)     2,325           --

Amortization of restricted stock                    --      --          --          --         --        881          881
                                            ----------     ---  ----------   ---------   --------   --------    ---------
Balance at January 30, 1999                 12,196,600       1      70,379    (301,564)    (2,325)    (2,264)    (235,773)

Net loss                                            --      --          --      (6,628)        --         --       (6,628)

Issuance of common stock                        17,665      --         158          --         --         --          158

Preferred stock dividends                           --      --          --     (22,986)        --         --      (22,986)

Amortization of restricted stock                    --      --          --          --         --        636          636
                                            ----------     ---  ----------   ---------   --------   --------    ---------
Balance at January 29, 2000                 12,214,265     $ 1     $70,537   $(331,178)   $(2,325)   $(1,628)   $(264,593)
                                            ==========     ===  ==========   =========   ========   ========    =========

Net income                                          --      --          --      11,929         --         --       11,929

Preferred stock dividends                           --      --          --     (26,484)        --         --      (26,484)

Issuance of common stock                        18,400      --         178          --         --         --          178

Amortization of restricted stock                    --      --          --          --         --        649          649

Repurchase of common stock                          --      --          --          --        (26)        --          (26)

Balance at February 3, 2001                 12,232,665     $ 1     $70,715   $(345,733)   $(2,351)   $  (979)   $(278,347)
                                            ==========     ===     =======   =========    =======    =======    =========
</TABLE>



See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999

(1) Nature Of Business And Summary Of Significant Accounting Policies

  (a)  Principles of Consolidation

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

  (b)  Business

       The Company designs, contracts for the manufacture of, markets and
       distributes men's and women's apparel and accessories. The Company's
       products are marketed, primarily in the United States, through retail
       stores, catalogs, and the Internet. The Company is also party to a
       licensing agreement which grants the licensee exclusive rights to use the
       Company's trademarks in connection with the manufacture and sale of
       products in Japan. The license agreement provides for payments based on a
       specified percentage of net sales.

       The Company is subject to seasonal fluctuations in its merchandise sales
       and results of operations. The Company expects its sales and operating
       results generally to be lower in the first and second quarters than in
       the third and fourth quarters (which include the back-to-school and
       holiday seasons) of each fiscal year.

       A significant amount of the Company's products are produced in the Far
       East through arrangements with independent contractors. As a result, the
       Company's operations could be adversely affected by political instability
       resulting in the disruption of trade from the countries in which these
       contractors are located or by the imposition of additional duties or
       regulations relating to imports or by the contractor's inability to meet
       the Company's production requirements.

  (c)  Fiscal Year

       The Company's fiscal year ends on the Saturday closest to January 31. The
       fiscal years 2000, 1999, and 1998 ended on February 3, 2001 (53 weeks),
       January 29, 2000 (52 weeks) and January 30, 1999 (52 weeks).

  (d)  Cash Equivalents

       For purposes of the consolidated statements of cash flows, the Company
       considers all highly liquid debt instruments, with maturities of 90 days
       or less when purchased, to be cash equivalents. Cash equivalents, which
       were $18,331,000 and $23,896,000 at February 3, 2001 and January 29,
       2000, are stated at cost, which approximates market value.

                                      F-6
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999


  (e) Merchandise Inventories

      Merchandise inventories are stated at the lower of cost (determined on a
      first-in, first-out basis) or market. The Company capitalizes certain
      design, purchasing and warehousing costs in inventory.

  (f) Advertising and Catalog Costs

      Direct response advertising which consists primarily of catalog production
      and mailing costs, are capitalized and amortized over the expected future
      revenue stream. The Company accounts for catalog costs in accordance with
      the AICPA Statement of Position ("SOP") 93-7, "Reporting on Advertising
      Costs." SOP 93-7 requires that the amortization of capitalized advertising
      costs be the amount computed using the ratio that current period revenues
      for the catalog cost pool bear to the total of current and estimated
      future period revenues for that catalog cost pool. Deferred catalog costs,
      included in prepaid expenses and other current assets, as of February 3,
      2001 and January 29, 2000 were $10,600,000 and $14,300,000. Catalog costs,
      which are reflected in selling and administrative expenses, for the fiscal
      years 2000, 1999, and 1998 were $69,000,000, $84,077,000, and
      $116,515,000.

      All other advertising costs are expensed as incurred. Advertising expenses
      were $6,671,000 for fiscal year 1999. Advertising costs were not
      significant in all other years.

  (g) Property and Equipment

      Property and equipment are stated at cost. Buildings and improvements are
      depreciated by the straight-line method over the estimated useful lives of
      twenty years. Furniture, fixtures and equipment are depreciated by the
      straight-line method over the estimated useful lives, ranging from three
      to ten years. Leasehold improvements are amortized over the shorter of
      their useful lives or related lease terms.

      Significant systems development costs are capitalized and amortized on a
      straight-line basis over periods ranging from three to five years.
      Approximately $15.0 million and $6.0 million of systems development costs
      were capitalized in fiscal years 2000 and 1999.

      The Company receives construction allowances upon entering into certain
      store leases. These construction allowances are recorded as deferred
      credits and are amortized over the term of the related lease.

  (h) Other Assets

      Other assets consist primarily of debt issuance costs of $8,703,000 and
      $11,282,000 at February 3, 2001 and January 29, 2000, which are amortized
      over the term of the related debt agreements.

  (i) Income Taxes

      The provision for income taxes includes taxes currently payable and
      deferred taxes resulting from the tax effects of temporary differences
      between the financial statement and tax bases of assets and liabilities,
      in accordance with Statement of Financial Accounting Standards ("SFAS")
      No. 109, "Accounting for Income Taxes."

                                      F-7
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999

  (j) Revenue Recognition

      Revenue is recognized for catalog and internet sales when merchandise is
      shipped to customers, and at the time of sale for retail sales. The
      Company accrues a sales return allowance for estimated returns of
      merchandise subsequent to the balance sheet date that relate to sales
      prior to the balance sheet date. Amounts billed to customers for shipping
      and handling fees related to catalog and internet sales are included in
      other revenues at the time of shipment.

  (k) Store Preopening Costs

      Costs associated with the opening of new retail and outlet stores are
      expensed as incurred.

  (l) Derivative Financial Instruments

      Derivative financial instruments are used by the Company to manage its
      interest rate and foreign currency exposures. For interest rate swap
      agreements, the net interest paid is recorded as interest expense on a
      current basis. Gains or losses resulting from market fluctuations are not
      recognized. The Company from time to time enters into forward foreign
      exchange contracts as hedges relating to identifiable currency positions
      to reduce the risk from exchange rate fluctuations. Gains and losses on
      contracts accounted for as hedges are deferred and recognized as
      adjustments to the bases of those assets. Contracts accounted for as
      speculative are marked to market and gains and losses are recorded
      currently. Such gains and losses were not material for the fiscal years
      ended February 3, 2001, January 29, 2000 and January 30, 1999.

  (m) Use of Estimates in the Preparation of Financial Statements

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.

  (n) Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
      of

      The Company reviews long-lived assets and certain identifiable intangibles
      for impairment whenever events or changes in circumstances indicate that
      the carrying amount of an asset may not be recoverable. The Company
      assesses the recoverability of such assets based upon estimated cash flow
      forecasts.

      During fiscal 1999 the Company wrote off $7,018,000 of capitalized
      computer software costs which were impaired by the Company's decision to
      adopt an enterprise resource planning system for its future information
      technology requirements.

  (o) Stock Based Compensation

      The Company accounts for stock-based compensation using the intrinsic
      value method of accounting for employee stock options as permitted by SFAS
      No. 123, "Accounting for Stock-Based Compensation". Accordingly
      compensation expense is not recorded for options granted if the option
      price is equal to the fair market price at the date of grant, as
      determined by management.

(p)   Reclassifications

      Certain amounts in the prior year have been reclassified to conform with
      the current year presentation.

                                      F-8
<PAGE>

                            J. CREW GROUP, INC. AND
                                  SUBSIDIARIES

                   Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999


(2)   Shipping and Handling Revenues

      In July 2000 the Emerging Issues Task Force of the Financial Accounting
      Standards Board issued EITF 00-10 "Accounting for Shipping and Handling
      Fees and Costs", which requires that amounts billed to a customer in a
      sale transaction related to shipping and handling should be classified as
      revenues. The Company adopted EITF 00-10 in its consolidated financial
      statements during the fourth quarter of fiscal 2000 and has restated all
      comparative prior period financial statements.

      Previously, the Company netted shipping and handling fees against third-
      party shipping costs in cost of sales. Handling costs, including shipping
      supplies and labor to assemble and ship the product, were included in
      selling, general and administrative expenses. After the restatement,
      shipping and handling fees are included in other revenues and shipping and
      handling costs are included in cost of sales.

(3)   Disposal of Businesses

  (a) Popular Club Plan

      In accordance with a sale agreement dated November 24, 1998 the Company
      sold all of the capital stock of Popular Club Plan, Inc. and subsidiaries
      ("PCP") to The Fingerhut Companies, Inc. effective as of October 30, 1998
      for gross proceeds of $42.0 million in cash.

      A gain on the sale of PCP of $10.0 million is included in the statement of
      operations for fiscal 1998. An additional gain of $1.0 million was
      recognized in fiscal 1999 from the reversal of certain estimated
      liabilities recorded at the date of sale. For the nine months ended
      October 30, 1998 revenues of $130.6 million were included in the statement
      of operations.

  (b) Clifford & Wills

      In 1998, management of the Company made a decision to exit the catalog and
      outlet store operations of Clifford & Wills ("C&W"). Revenues of C&W
      included in the statement of operations for the year ended January 30,
      1999 were $83.8 million. Revenues and expenses for fiscal 1999 and 2000
      were not material and as a result have been netted in the accompanying
      consolidated statement of operations.

      The statement of operations for fiscal year 1998 includes a charge of
      $13,300,000 to write down assets to net realizable value and provide for
      other costs to be incurred in the discontinuance of operations including
      lease termination and severance costs. This loss includes the write down
      of inventories of $9,400,000; the estimated loss on cancellation of leases
      of $1,000,000, severance costs of $1,100,000, write down of property and
      equipment of $600,000, and other related costs of $1,200,000. The
      inventory write down of $9,400,000 was required due to lower than
      anticipated recovery rates on the liquidation of these inventories.
      Additionally fourth quarter charges of $1,700,000 included in selling
      expense were incurred relating to deferred catalog costs.

      In February 2000 the Company sold certain intellectual property assets 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. After consideration of the proceeds
      from the sale and other terms of the agreement the Company provided an
      additional $4,000,000 to write down inventories to net realizable value as
      of January 29, 2000.

                                      F-9
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999


       At February 3, 2001 the Company determined that the realizable value of
       the remaining net assets of C&W, primarily inventories, was less than
       their carrying amounts and an additional charge of $4,130,000 was taken.

(4)  Recapitalization Transaction

     In October 1997, the Company entered into a recapitalization transaction
     (the "Recapitalization"). Holdings purchased from the existing Shareholders
     for an aggregate purchase price of approximately $316,688,000 all of the
     outstanding shares of Holdings' capital stock, other than a certain number
     of shares of Holdings' common stock held by existing shareholders which
     represented 14.8% of the outstanding shares of Holdings' common stock
     immediately following consummation of the Recapitalization. The purchase of
     such outstanding shares of capital stock was financed in part by (a)
     issuing to TPG Partners II, L.P., its affiliates and other investors shares
     of common stock of Holdings for approximately $63,891,000 and shares of
     preferred stock of Holdings for $125,000,000 and (b) consummating various
     debt and securitization transactions. In connection with the
     Recapitalization, the Company repaid substantially all of its preexisting
     debt obligations immediately before the consummation of the
     Recapitalization.


(5)  Other Current Liabilities

     Other current liabilities consist of:

                                                        February 3,  January 29,
                                                           2001         2000
                                                        -----------  -----------

     Customer liabilities                               $12,251,000  $ 8,855,000
     Accrued catalog and marketing costs                  4,515,000   11,503,000
     Taxes, other than income taxes                       3,686,000    2,372,000
     Accrued interest                                     4,746,000    4,926,000
     Accrued occupancy                                    2,339,000    6,957,000
     Reserve for sales returns                            6,530,000    5,011,000
     Accrued compensation                                11,051,000    7,411,000
     Other                                               30,050,000   23,187,000
                                                        -----------  -----------
                                                        $75,168,000  $70,222,000
                                                        -----------  -----------

                                      F-10
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999



(6)   Long-Term Debt

                                                      February 3,    January 29,
                                                         2001          2000
                                                         ----          ----

      Term loan (a)                                   $         --  $ 34,000,000
      10-3/8% senior subordinated notes (b)            150,000,000   150,000,000
      13-1/8% senior discount debentures (c)           114,292,000   100,684,000
                                                      ------------  ------------
         Total                                        $264,292,000  $284,684,000
                                                      ============  ============

  (a) The term loan was subject to the same interest rates and security terms as
      the Revolving Credit Agreement and was fully repaid in January 2001.
      Weighted average interest rate was 8.5% at January 29, 2000.

  (b) The senior subordinated notes are unsecured general obligations of J. Crew
      Operating Corp., a subsidiary of Holdings, and are subordinated in right
      of payment to all senior debt. Interest on the notes accrues at the rate
      of 10-3/8% per annum and is payable semi-annually in arrears on April 15
      and October 15. The notes mature on October 15, 2007 and may be redeemed
      at the option of the issuer subsequent to October 15, 2002 at prices
      ranging from 105.188% of principal in 2002 to 100% in 2005 and thereafter.

                                      F-11
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999

  (c) The senior discount debentures were issued in aggregate principal amount
      of $142.0 million at maturity and mature on October 15, 2008. These
      debentures are senior unsecured obligations of Holdings. Cash interest
      will not accrue prior to October 15, 2002. However, the Company records
      non-cash interest expense as an accretion of the principal amount of the
      debentures at a rate of 13-1/8% per annum. Interest will be payable in
      arrears on April 15 and October 15 of each year subsequent to October 15,
      2002. The senior discount debentures may be redeemed at the option of
      Holdings on or after October 15, 2002 at prices ranging from 106.563% of
      principal to 100% in 2005 and thereafter.

      There are no maturities of long-term debt required during the next five
      years.

  (7) Lines of Credit

      On October 17, 1997, the Company entered into a syndicated revolving
      credit agreement of up to $200.0 million (the "Revolving Credit
      Agreement") with a group of banks. This agreement was amended on March 18,
      1998, November 23, 1998 and April 20, 1999. Borrowings may be utilized to
      fund the working capital requirements of the Company including issuance of
      stand-by and trade letters of credit and bankers' acceptances.

      Borrowings are secured by a perfected first priority security interest in
      all assets of the Company's subsidiaries and bear interest, at the
      Company's option, at a base rate equal to the Administrative Agent's
      Eurodollar rate plus an applicable margin or an alternate base rate equal
      to the highest of the Administrative Agent's prime rate, a certificate of
      deposit rate plus 1% or the Federal Funds effective rate plus one-half of
      1% plus, in each case, an applicable margin. The Revolving Credit
      Agreement matures on October 17, 2003.

      Maximum borrowings under revolving credit agreements were $34,000,000,
      $58,000,000 and $104,000,000 during fiscal years 2000, 1999 and 1998 and
      average borrowings were $9,800,000, $30,800,000, and $47,500,000. There
      were no borrowings outstanding at February 3, 2001 and January 29, 2000.

      Outstanding letters of credit established to facilitate international
      merchandise purchases at February 3, 2001 and January 29, 2000 amounted to
      $50,948,000 and $38,315,000.

      The provisions of the Revolving Credit Agreement, as amended, require that
      the Company maintain certain levels of (i) leverage ratio, (ii) interest
      coverage ratio and (iii) inventory coverage ratio; provide for limitations
      on capital expenditures, sale and leaseback transactions, liens,
      investments, sales of assets and indebtedness; and prohibit the payment of
      cash dividends on shares of common stock.

                                     F-12
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999

  (8) Common Stock

      The restated certificate of incorporation authorizes Holdings to issue up
      to 100,000,000 shares of common stock; par value $.01 per share. At
      February 3, 2001, shares issued were 12,232,665 and shares outstanding
      were 11,743,265. In April 1999 the Board of Directors approved a 200 for 1
      stock split of its common stock in the form of a stock dividend. During
      1998 directors acquired 30,000 shares of common stock and converted fees
      into 17,600 shares of common stock. During 1999 and 2000 directors
      converted fees into 17,665 shares and 16,400 shares of common stock.

  (9) Redeemable Preferred Stock

      The restated certificate of incorporation authorizes Holdings to issue up
      to:

      (a) 1,000,000 shares of Series A cumulative preferred stock; par value
          $.01 per share; and

      (b) 1,000,000 shares of Series B cumulative preferred stock; par value
          $.01 per share.

      In connection with the Recapitalization, Holdings issued 92,500 shares of
      Series A Preferred Stock and 32,500 shares of Series B Preferred Stock.
      During 1998 directors acquired 300 shares of preferred stock at $1,000 per
      share.

      The Preferred Stock accumulates dividends at the rate of 14.5% per annum
      (payable quarterly) for periods ending on or prior to October 17, 2009.
      Dividends compound to the extent not paid in cash. On October 17, 2009,
      Holdings is required to redeem the Series B Preferred Stock and to pay all
      accumulated but unpaid dividends on the Series A Preferred Stock.
      Thereafter, the Series A Preferred Stock will accumulate dividends at the
      rate of 16.5% per annum. Subject to restrictions imposed by certain
      indebtedness of the Company, Holdings may redeem shares of the Preferred
      Stock at any time at redemption prices ranging from 103% of liquidation
      value plus accumulated and unpaid dividends at October 17, 1998 to 100% of
      liquidation value plus accumulated and unpaid dividends at October 17,
      2000 and thereafter. In certain circumstances (including a change of
      control of Holdings), subject to restrictions imposed by certain
      indebtedness of the Company, Holdings may be required to repurchase shares
      of the Preferred Stock at liquidation value plus accumulated and unpaid
      dividends.

      Accumulated but unpaid dividends amounted to $75,018,000 at February 3,
      2001. Dividends are recorded as an increase to redeemable preferred stock
      and a reduction of retained earnings.

 (10) Commitments and Contingencies
      (a) Operating Leases
          As of February 3, 2001, the Company was obligated under various long-
          term operating leases for retail and outlet stores, warehouses, office
          space and equipment requiring minimum annual rentals. These operating
          leases expire on varying dates through 2012. At February 3, 2001
          aggregate minimum rentals in future periods are, as follows:


           Fiscal year                 Amount
           -----------                 ------
              2001                 $ 42,131,000
              2002                   40,095,000
              2003                   38,917,000
              2004                   35,864,000
              2005                   33,212,000
              Thereafter            139,432,000

                                     F-13
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES
                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999


         Certain of these leases include renewal options and escalation clauses
         and provide for contingent rentals based upon sales and require the
         lessee to pay taxes, insurance and other occupancy costs.

         Rent expense for fiscal 2000, 1999, and 1998 was $45,138,000,
         $39,474,000, and $42,347,000, including contingent rent based on store
         sales of $1,974,000, $2,600,000, and $3,270,000.

     (b) Employment Agreements

         The Company is party to employment agreements with certain executives
         which provide for compensation and certain other benefits. The
         agreements also provide for severance payments under certain
         circumstances.

     (c) Litigation

         The Company is subject to various legal proceedings and claims that
         arise in the ordinary conduct of its business. Although the outcome of
         these claims cannot be predicted with certainty, management does not
         believe that the ultimate resolution of these matters will have a
         material adverse effect on the Company's financial condition or results
         of operations.


(11) Employee Benefit Plan

     The Company has a thrift/savings plan pursuant to Section 401 of the
     Internal Revenue Code whereby all eligible employees may contribute up to
     15% of their annual base salaries subject to certain limitations. The
     Company's contribution is based on a percentage formula set forth in the
     plan agreement. Company contributions to the thrift/savings plan were
     $1,241,000, $1,320,000 and $1,780,000 for fiscal 2000, 1999 and 1998.

(12) License Agreement

     The Company has a licensing agreement through January 2003 with Itochu
     Corporation, a Japanese trading company. The agreement permits Itochu to
     distribute J. Crew merchandise in Japan. The Company earns royalty payments
     under the agreement based on the sales of its merchandise. Royalty income,
     which is included in other revenues, for fiscal 2000, 1999, and 1998 was
     $3,020,000, $2,505,000, and $2,712,000.

(13) Interest Expense - Net

     Interest expense, net consists of the following:

<TABLE>
<CAPTION>
                                                        2000          1999          1998
                                                        ----          ----          ----
        <S>                                         <C>           <C>           <C>
        Interest expense                            $34,390,000   $36,903,000   $38,260,000
        Amortization of deferred financing costs      2,793,000     2,196,000     2,119,000
        Interest income                                (541,000)     (238,000)   (1,056,000)
                                                    -----------   -----------   -----------
        Interest expense, net                       $36,642,000   $38,861,000   $39,323,000
                                                    -----------   -----------   -----------
</TABLE>

     Interest expense in fiscal 1999 includes $1,029,000 incurred in connection
     with the settlement of a sales and use tax assessment. Interest income in
     fiscal 1998 includes $979,000 related to a federal income tax refund.

                                     F-14
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999



(14) Other Revenues

     Other revenues consist of the following:


                                              2000         1999         1998
                                              ----         ----         ----
        Shipping and handling fees        $35,297,000  $34,072,000  $46,584,000
        Royalties                           3,020,000    2,505,000    2,712,000
        Finance charge income                      --           --    5,325,000
                                          -----------  -----------  -----------
                                          $38,317,000  $36,577,000  $54,621,000
                                          ===========  ===========  ===========


(15) Financial Instruments

     The following disclosure about the fair value of financial instruments is
     made in accordance with the requirements of SFAS No. 107, "Disclosures
     About Fair Value of Financial Instruments." The fair value of the Company's
     long-term debt is estimated to be approximately $202,793,000 and
     $235,215,000 at February 3, 2001 and January 29, 2000, and is based on
     dealer quotes or quoted market prices of the same or similar instruments
     The carrying amounts of long-term debt were $264,292,000 and $284,684,000
     at February 3, 2001 and January 29, 2000. The carrying amounts reported in
     the consolidated balance sheets for cash and cash equivalents, notes
     payable-bank, accounts payable and other current liabilities approximate
     fair value because of the short-term maturity of those financial
     instruments. The estimates presented herein are not necessarily indicative
     of amounts the Company could realize in a current market exchange.

(16) Income Taxes

     The Company accounts for income taxes in accordance with SFAS No. 109,
     "Accounting for Income Taxes". This statement requires the use of the
     liability method of accounting for income taxes. Under the liability
     method, deferred taxes are determined based on the difference between the
     financial reporting and tax bases of assets and liabilities using enacted
     tax rates in effect in the years in which the differences are expected to
     reverse.

                                     F-15
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999


The income tax provision/benefit consists of:

<TABLE>
<CAPTION>
                                                 2000          1999           1998
                                                 ----          ----           ----
     <S>                                     <C>          <C>           <C>
     Current:
     Foreign                                 $  300,000   $   250,000   $    270,000
     Federal                                  6,253,000     3,100,000        600,000
     State and local                            920,000     1,440,000      1,097,000
                                             ----------   -----------   ------------
                                              7,473,000     4,790,000      1,967,000
                                             ----------   -----------   ------------
     Deferred - Federal, state and local         27,000    (6,840,000)   (10,129,000)
                                             ----------   -----------   ------------
         Total                               $7,500,000   $(2,050,000)  $ (8,162,000)
                                             ==========   ===========   ============
</TABLE>

A reconciliation between the provision/(benefit) for income taxes based on the
U.S. Federal statutory rate and the Company's effective rate is as follows.


                                                      2000     1999      1998
                                                     -----   ------   -------
        Federal income tax rate                       35.0%   (35.0)%   (35.0)%
        State and local income taxes, net
         of federal benefit                            7.6      7.0      (1.4)
        Nondeductible expenses and other              (4.0)     4.4       1.7
                                                     -----   ------   -------
        Effective tax rate                            38.6%   (23.6)%   (34.7)%
                                                     =====   ======   =======

The tax effect of temporary differences which give rise to deferred tax assets
and liabilities are:

<TABLE>
<CAPTION>
                                                                         February 3,             January 29,
                                                                            2001                    2000
                                                                            ----                    ----
     <S>                                                                <C>                     <C>
     Deferred tax assets:

        Original issue discount                                         $ 15,007,000            $ 8,629,000
        State and local net operating loss carryforwards                   1,900,000              3,034,000
        Reserve for sales returns                                          2,625,000              2,012,000
        Other                                                              3,412,000              2,298,000
                                                                        ------------            -----------
                                                                          22,944,000             15,973,000
                                                                        ------------            -----------
     Deferred tax liabilities:

        Prepaid catalog and other prepaid expenses                        (8,026,000)            (8,870,000)
        Difference in book and tax basis
            for property and equipment                                    (5,957,000)             1,885,000
                                                                        ------------            -----------
                                                                         (13,983,000)            (6,985,000)
                                                                        ------------            -----------
          Net deferred income tax asset                                 $  8,961,000            $ 8,988,000
                                                                        ============            ===========
</TABLE>

                                     F-16
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999


     Management believes that it is more likely than not that the results of
     future operations will generate sufficient taxable income to realize the
     deferred tax assets. The Company has state and local income tax net
     operating loss carryforwards of varying amounts.

(17) Stock Options

     The J. Crew Group, Inc. Stock Option Plan (the "Option Plan") was adopted
     by the Company in 1997. Under the terms of the Option Plan, an aggregate of
     1,910,000 shares are available for grant to certain key employees or
     consultants. The options have terms of seven to ten years and become
     exercisable over a period of five years. Options granted under the Option
     Plan are subject to various conditions, including under some circumstances,
     the achievement of certain performance objectives.


     A summary of stock option activity for the Plan was, as follows:


<TABLE>
<CAPTION>
                                                 2000                        1999                       1998
                                                 ----                        ----                       ----
                                                        Weighted                    Weighted                   Weighted
                                                        --------                    --------                   --------
                                                         average                     average                    average
                                                         -------                     -------                    -------
                                         Shares   exercise price     Shares   exercise price    Shares   exercise price
                                         ------   --------------     ------   --------------    ------   --------------
<S>                                   <C>         <C>             <C>         <C>             <C>        <C>
Outstanding, beginning of year        1,532,800           $ 8.87    997,200            $8.00   786,800            $8.31

        Granted                         374,700            10.17    772,800             9.47   431,000             6.82

        Exercised                        (2,000)            6.82          -                -         -                -

        Cancelled                      (116,750)            8.72   (237,200)            7.14  (220,600)            6.82
                                      ---------           ------  ---------            -----  --------            -----
Outstanding, end of year              1,788,750           $ 9.15  1,532,800            $8.87   997,200            $8.00
                                      ---------           ------  =========            =====  ========            =====
Options exercisable at end of year      583,000           $ 9.24    318,040            $7.97   189,460            $7.06
                                      =========           ======  =========            =====  ========            =====
</TABLE>

(18) Employee Restricted Stock

     Under the terms of employment agreements with several key executives
     661,600 shares of restricted stock were awarded in fiscal 1997 and 487,400
     shares in fiscal 1998. These shares vest through October 2002. Deferred
     compensation of $5,620,000 was credited to additional paid in capital.
     Deferred compensation is charged to expense over the vesting period.

     In connection with the termination of an executive in 1998, 487,400 shares
     were forfeited and deferred compensation of $2,325,000 was reversed and the
     shares were reacquired as treasury stock.

(19) Termination costs and other non-recurring employment contract charges

     Charges of $2,850,000 were incurred in fiscal 1998 in connection with the
     termination of the employment contracts of two senior executives including
     the former Chief Executive Officer. Additionally, during fiscal 1998, tax
     gross-up payments of $5,145,000 were made on behalf of senior executives
     relating to restricted stock grants.

                                     F-17
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999


(20) Segment Information

     The Company designs, contracts to manufacture and markets men's, women's,
     and children's apparel, accessories and home furnishings primarily under
     Company owned brand names. The brands are marketed through various channels
     of distribution including retail and factory outlet stores, catalogs, the
     Internet and licensing arrangements with third parties. These operations
     have been aggregated into three reportable segments based on brand
     identification: J. Crew, Clifford & Wills and Popular Club Plan. Management
     evaluates the results of operations of its segments based on income from
     operations.

     All of the Company's identifiable assets are located in the United States.
     Export sales are not significant.

     During 1998, the Company sold PCP to The Fingerhut Companies, Inc. and
     decided to discontinue the operations of its C&W brand. The revenues and
     operating income of PCP are included through October 30, 1998 and through
     January 30, 1999 for C&W.

     Income from operations relating to Clifford & Wills for fiscal 1998
     includes a non cash write-down of $13,300,000 relating to the
     discontinuance of C&W operations and $1,700,000 of fourth quarter charges
     to write off deferred catalog costs. Fiscal 1999 and 2000 include
     additional charges of $4,000,000 and $4,130,000 primarily to write down
     inventories to net realizable value. (See note 3 to the consolidated
     financial statements).

                                     F-18
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999

Corporate and other expenses include expenses incurred by the corporate office
and certain non-recurring expenses that are not allocated to specific business
units. Corporate and other expenses in fiscal 1999 include the write off of
impaired software development costs. Corporate and other expenses in fiscal 1998
include tax gross-up payments related to restricted stock grants and employee
contract termination costs.

Segment assets represent the assets used directly in the operations of each
business unit such as inventories and property and equipment. Corporate assets
consist principally of investments, deferred financing costs and certain
capitalized software.

The accounting policies used for segment reporting are consistent with those
described in the summary of significant accounting policies.

<TABLE>
<CAPTION>
                                                [$ in thousands]
Revenues                               2000           1999               1998
                                       ----           ----               ----
<S>                                  <C>            <C>                <C>
J. Crew                              $825,975       $750,696           $656,472
Clifford & Wills                           --             --             83,796
PCP                                        --             --            130,574
                                     --------       --------           --------
                                      825,975        750,696            870,842
                                     ========       ========           ========

Income from operations

J. Crew                                61,094         41,052             34,736
Clifford & Wills                       (4,130)        (4,000)           (16,694)
PCP                                        --             --             (2,701)
Corporate and other expenses             (893)        (7,869)            (9,560)
                                     --------       --------           --------
Income from operations                 56,071         29,183              5,781
                                                    --------           --------

Interest expense, net                 (36,642)       (38,861)           (39,323)
Gain on sale of PCP                        --          1,000             10,000

Income/(loss) before income taxes      19,429       $ (8,678)          $(23,542)
                                     ========       ========           ========

Depreciation and amortization
J. Crew                              $ 22,448       $ 19,051           $ 14,455
Clifford & Wills                           --             --                327
PCP                                        --             --              1,015
Corporate                                 152            190                175
                                     --------       --------           --------
                                     $ 22,600       $ 19,241           $ 15,972
                                     ========       ========           ========
</TABLE>

                                     F-19
<PAGE>

                            J. CREW GROUP, INC. AND
                                 SUBSIDIARIES

                  Notes to Consolidated Financial Statements

      Years ended February 3, 2001, January 29, 2000 and January 30, 1999


Identifiable assets                             2000         1999        1998
                                                ----         ----        ----

J. Crew                                       $342,541     $305,552    $324,949
Clifford & Wills                                    --        8,927      17,377
Corporate                                       47,320       59,125      34,004
                                              --------     --------    --------
                                              $389,861     $373,604    $376,330
                                              ========     ========    ========

Capital expenditures (net of disposals)

J. Crew                                       $ 55,394     $ 39,435    $ 34,084
Clifford & Wills                                    --           --         (59)
PCP                                                 --           --       5,264
Corporate                                          300        9,249       1,888
                                              --------     --------    --------
                                              $ 55,694     $ 48,684    $ 41,177
                                              ========     ========    ========

                                     F-20
<PAGE>

(21) Quarterly Financial Information (Unaudited)
     --------------------------------



                                          ($ in millions)

                    13 weeks   13 weeks       13 weeks     14 weeks    53 weeks
                       ended      ended          ended        ended       ended
                     4/29/00    7/29/00       10/28/00     2/3/01(a)     2/3/01
                    --------   --------      ---------     --------      ------


Net sales           $  158.0   $  162.2      $   194.0       $273.5    $  787.7

Gross profit            72.8       71.0           90.2        128.1       362.1

Net income (loss)   $   (5.2)  $   (5.1)     $     4.5       $ 17.7    $   11.9



                    13 weeks   13 weeks       13 weeks     13 weeks    52 weeks
                       ended      ended          ended        ended       ended
                      5/1/99    7/31/99       10/30/99      1/29/00(b)  1/29/00
                    --------   --------      ---------       ------    --------


Net sales           $  142.3   $  148.0      $   173.7       $250.1    $  714.1

Gross profit            63.6       60.8           77.7        117.4       319.5

Net income (loss)   $   (8.0)  $   (6.7)     $     1.1       $  7.0    $   (6.6)



(a)  includes $4.1 million writedown of net assets of C&W.

(b)  includes $4.0 million writedown of net assets of C&W and $6.3 million
     writeoff of software development costs.

                                     F-21
<PAGE>

SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                            beginning    charged to cost    charged to other                   ending
                                             balance      and expenses          accounts         deductions    balance

                                                                            ($ in thousands)
<S>                                         <C>          <C>                <C>                  <C>           <C>
Allowance for doubtful accounts
-------------------------------
(deducted from accounts receivable)

fiscal year ended:
                                                                                                 $ (5,486)(a)
January 30, 1999                               $5,438         $  5,627                $   --       (5,579)(c)   $   --

Inventory reserve
-----------------
 (deducted from inventories)

fiscal year ended:

February 3, 2001                               $4,447         $  2,913(b)             $   --     $     --       $7,360

January 29, 2000                                6,122           (1,675)(b)                --           --        4,447
                                                                                                   (2,200)(c)
January 30, 1999                                4,400            4,929(b)                 --       (1,007)(d)    6,122

Allowance for sales returns
---------------------------
(included in other current liabilities)

fiscal year ended:

February 3, 2001                               $5,011         $  1,519(b)             $   --     $     --       $6,530

January 29, 2000                                3,473            1,538(b)                 --                     5,011

January 30, 1999                                3,529              844(b)                 --          500(c)     3,473
                                                                                                      400(d)
</TABLE>

(a) accounts deemed to be uncollectible
(b) The inventory reserve and allowance for sales returns are evaluated at the
    end of each fiscal quarter and adjusted (plus or minus) based on the
    quarterly evaluation. During each period inventory write-downs and sales
    returns are charged to the statement of operations as incurred.
(c) charged to gain on sale of Popular Club Plan, Inc.
(d) reclassified to net assets held for disposal (relating to discontinuance of
    Clifford & Wills operation)

                                     F-22
<PAGE>

                                 EXHIBIT INDEX

Exhibit
  No.                           Description
  --                            -----------

 3.1      Restated Certificate of Incorporation of J. Crew Group, Inc.
          (incorporated by reference to Exhibit 3.1 to the Registrant's
          Registration Statement on Form S-4, File No. 333-42427, filed December
          16, 1997 (the "Registration Statement")).

 3.2*     By-laws of J. Crew Group, Inc., as amended.

 4.1      Indenture, dated as of October 17, 1997, between J. Crew Group, Inc.,
          as issuer, and State Street Bank and Trust Company, as trustee,
          relating to the Debentures (incorporated by reference to Exhibit 4.3
          to the Registration Statement).

 4.2(a)   Credit Agreement, dated as of October 17, 1997 ("Credit Agreement"),
          among J. Crew Group, Inc., J. Crew Operating Corp., the Lenders Party
          thereto, the Chase Manhattan Bank, as Administrative Agent, and
          Donaldson, Lufkin & Jenrette Securities Corporation, as Syndication
          Agent (incorporated by reference to Exhibit 4.5 to Amendment No. 1 to
          the Registration Statement, filed February 6, 1998).

 4.2(b)   Amendment, dated as of November 23, 1998, to the Credit Agreement
          (incorporated by reference to Exhibit 4.2(b) to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended January 30, 1999
          (the "1998 Form 10-K")).

 4.2(c)   Amendment, dated as of March 18, 1998, to the Credit Agreement
          (incorporated by reference to Exhibit 4.2(c) of the 1998 Form 10-K).

 4.2(d)   Amendment and Restatement Agreement, dated as of April 20, 1999,
          relating to the Credit Agreement (incorporated by reference to Exhibit
          4.2(d) of the 1998 Form 10-K).

 4.3      Guarantee Agreement, dated as of October 17, 1997, among J. Crew
          Group, Inc., the subsidiary guarantors of J. Crew Operating Corp. that
          are signatories thereto and The Chase Manhattan Bank (incorporated by
          reference to Exhibit 4.6 to the Registration Statement).

 4.4      Indemnity, Subrogation and Contribution Agreement, dated as of October
          17, 1997, among J. Crew Operating Corp., the subsidiary guarantors of
          J. Crew Operating Corp. that are signatories thereto and The Chase
          Manhattan Bank (incorporated by reference to Exhibit 4.7 to the
          Registration Statement).

 4.5      Pledge Agreement, dated as of October 17, 1997, among J. Crew
          Operating Corp., J. Crew Group, Inc., the subsidiary guarantors of J.
          Crew Operating Corp. that are signatories thereto and The Chase
          Manhattan Bank (incorporated by reference to Exhibit 4.8 to the
          Registration Statement).

 4.6      Security Agreement, dated as of October 17, 1997, among J. Crew
          Operating Corp., J. Crew Group, Inc., the subsidiary guarantors of J.
          Crew Operating Corp. that are signatories thereto and The Chase
          Manhattan Bank (incorporated by reference to Exhibit 4.9 to the
          Registration Statement).

 4.7      Registration Rights Agreement, dated as of October 17, 1997, by and
          among J. Crew Group, Inc., Donaldson, Lufkin & Jenrette Securities
          Corporation and Chase Securities Inc. (incorporated by reference to
          Exhibit 4.10 to the Registration Statement).

          NOTE:  Pursuant to the provisions of paragraph (b)(4)(iii) of Item 601
          of Regulation S-K, the Registrant hereby undertakes to furnish to the
          Commission upon request copies of the instruments pursuant to which
          various entities hold long-term debt of the Company or its parent or
          subsidiaries, none of which instruments govern indebtedness exceeding
          10 percent of the total assets of the Company and its subsidiaries on
          a consolidated basis.

                                       1
<PAGE>

Exhibit
  No.                           Description
  --                            -----------

 10.1(a)+   Employment Agreement, dated October 17, 1997, among J. Crew Group,
            Inc., J. Crew Operating Corp., TPG Partners II, L.P. (only with
            respect to Section 2(c) therein) and Emily Woods (the "Woods
            Employment Agreement") (incorporated by reference to Exhibit 10.1 to
            the Registration Statement).

 10.1(b)+   Letter Agreement, dated February 4, 2000, between J. Crew Group,
            Inc. and Emily Woods (incorporated by reference to Exhibit 10.1 (b)
            to the Registrant's Annual Report on Form 10-K for the fiscal year
            ended January 29, 2000 (the "1999 Form 10-K")).

 10.2+      J. Crew Operating Corp. Senior Executive Bonus Plan (included as
            Exhibit A to the Woods Employment Agreement filed as Exhibit 10.1(a)
            above).

 10.3+      Stock Option Grant Agreement, made as of October 17, 1997, between
            J. Crew Group, Inc. and Emily Woods (time based) (incorporated by
            reference to Exhibit 10.3 to the Registration Statement).

 10.4+      Stock Option Grant Agreement, made as of October 17, 1997, between
            J. Crew Group, Inc. and Emily Woods (performance based)
            (incorporated by reference to Exhibit 10.4 to the Registration
            Statement).

 10.5(a)+   Employment Agreement, dated May 3, 1999, between J.Crew Group, Inc.
            and Mark Sarvary (incorporated by reference to Exhibit 10.1 to the
            Registrant's Quarterly Report on Form 10-Q for the period ended May
            1, 1999).

 10.5(b)+   Letter Agreement, dated August 9, 1999, between Mark Sarvary and J.
            Crew Operating Corp. (incorporated by reference to Exhibit 10.5(b)
            to the 1999 Form 10-K).

 10.6+      Agreement, dated September 30, 1999, between J. Crew Operating Corp.
            and Carol Sharpe (incorporated by reference to Exhibit 10.6 to the
            1999 Form 10-K).

 10.7+ *    Employment Agreement, dated February 18, 2000, between J. Crew
            Operating Corp. and Trudy Sullivan.

 10.8(a)+ * Employment Agreement, dated April 18, 1999, between J. Crew Group,
            Inc. and Richard Anders.

 10.8(b)+ * Letter Agreement, dated January 29, 2001, between J. Crew Group,
            Inc. and Richard Anders.

 10.9       Stockholders' Agreement, dated as of October 17, 1997, among J. Crew
            Group, Inc. and the Stockholder signatories thereto (incorporated by
            reference to Exhibit 4.1 to the Registration Statement).

 10.10      Stockholders' Agreement, dated as of October 17, 1997, among J. Crew
            Group, Inc., TPG Partners II, L.P. and Emily Woods (included as
            Exhibit B to the Woods Employment Agreement filed as Exhibit 10.1 to
            the Registration Statement).

 10.11(a)+  J. Crew Group, Inc. 1997 Stock Option Plan  (the "1997 Plan")
            (incorporated by reference to Exhibit 10.13 to the Registration
            Statement).

 10.11(b)+* Amendment to the 1997 Plan, dated July 24, 2000.

 10.11(c)+* Amendment to the 1997 Plan, dated February 2, 2001.

                                       2
<PAGE>

Exhibit
  No.                           Description
  --                            -----------

 10.12     Agreement, dated August 14, 1997, between R.R. Donnelley & Sons
           Company and J. Crew Inc. (incorporated by reference to Exhibit 10.11
           to the Registration Statement).

 21.1      Subsidiaries of J. Crew Group, Inc. (incorporated by reference to
           Exhibit 21.1 to the 1999 Form 10-K).
__________
+Management contract or compensatory plan or arrangement.

* Filed herewith

                                       3