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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

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**FORM10-Q**

**(Mark One)**
| **ý** | **QUARTERLY REPORT PERSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30,  2001** |
|------------|-----------------------------------------------------------------------------------------------------------------------------------|

**OR**
| **o** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|-----------------------------------------------------------------------------------------------|

**Commission file number 0-22480**

**The J. Jill Group, Inc.**(Exact Name of Registrant as Specified inits Charter)

| **Delaware**                                                          | **04-2973769**                        |
|-----------------------------------------------------------------------|---------------------------------------|
|  (State or Other Jurisdiction of  Incorporation or Organization) | (I.R.S. Employer  Identification No.) |
|                                                                  |                                  |
| **4 Batterymarch Park  Quincy, MA**                                   | **02169**                             |
| (Address of Principal  Executive Offices)                             |  (Zip Code)                      |

**Registrant’s telephone number,including area code:  (617) 376-4300**

             Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.  Yes ýNo o

             Sharesoutstanding of the Registrant’s common stock (par value $0.01) at July 27,2001: 11,916,611

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**THE J. JILL GROUP, INC.INDEX TO QUARTERLY REPORT ON FORM 10-QFOR THE QUARTER ENDED JUNE 30, 2001**
| PART  I – FINANCIAL INFORMATION |                                                                                                                  |
|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------|
|                                 |                                                                                                                  |   |
|                                 | Item  1.                                                                                                              | Condensed  Consolidated Financial Statements |   |
|                                 |                                                                                                                  |   |   |
|                                 | Consolidated Balance Sheets  at June 30, 2001, June 24, 2000 and December 30, 2000                                    |   |
|                                 |                                                                                                                  |   |
|                                 | Consolidated  Statements of Operations for the three months and the six months ended June  30, 2001 and June 24, 2000 |   |
|                                 |                                                                                                                  |   |
|                                 | Consolidated  Statements of Cash Flows for the six months ended June 30, 2001 and June 24,  2000                      |   |
|                                 |                                                                                                                  |   |
|                                 | Notes  to Condensed Consolidated Financial Statements                                                                 |   |
|                                 |                                                                                                                  |   |
|                                 | Item  2.                                                                                                              | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
|                                 |                                                                                                                  |   |   |
|                                 | Item  3.                                                                                                              | Quantitative  and Qualitative Disclosures about Market Risk |   |
|                                 |                                                                                                                  |   |   |
| PART II – OTHER INFORMATION     |                                                                                                                  |
|                                 |                                                                                                                  |
|                                 | Item  4.                                                                                                              | Submission  of Matters to a Vote of Security Holders |   |
|                                 |                                                                                                                  |   |   |
|                                 | Item  6                                                                                                               | Exhibits  and Reports on Form 8-K |   |
|                                 |                                                                                                                  |   |   |
| SIGNATURES                           |                                                                                                                  |

**THE J. JILL GROUP, INC.CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited)**
|                                      | **June 30,**                                                                                                                                                                                                     |    | **June 24,**         |   | **December 30,**     |    |
|-------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|----------------------|--------|----------------------|---------|
|                                      | **2001**                                                                                                                                                                                                         |    | **2000**             |   | **2000**             |    |
|                                      | ****                                                                                                                                                                                                             |    | ****                 |   | ****                 |    |
|                                      |                                                                                                                                                                                                             |    | **(restated)**       |   |                 |    |
|                                      |                                                                                                                                                                                                             |    |                 |   |                 |    |
| **ASSETS**                                |                                                                                                                                                                                                             |    |                 |   |                 |    |
| Current assets:                           |                                                                                                                                                                                                             |    |                 |   |                 |    |
|                                      | Cash and cash equivalents                                                                                                                                                                                        | $       | 20,001               |   | $                    | 3,129   |   | $ | 1,594 |   |
|                                      | Cash held in escrow                                                                                                                                                                                              | 762     |                 | 596    |                 | 407     |   |
|                                      | Accounts receivable                                                                                                                                                                                              | 1,543   |                 | 2,174  |                 | 8,479   |   |
|                                      | Assets held for sale                                                                                                                                                                                             | -       |                 | 2,281  |                 | -       |   |
|                                      | Inventory                                                                                                                                                                                                        | 39,454  |                 | 24,364 |                 | 37,874  |   |
|                                      | Prepaid catalog expenses                                                                                                                                                                                         | 4,951   |                 | 4,004  |                 | 4,116   |   |
|                                      | Deferred income taxes                                                                                                                                                                                            | 7,563   |                 | 9,389  |                 | 7,455   |   |
|                                      | Other current assets                                                                                                                                                                                             | 3,153   |                 | 1,524  |                 | 1,951   |   |
|                                      |                                                                                                                                                                                                                  |    |                      |   |                      |    |
|                                      | Total current assets                                                                                                                                                                                             | 77,427  |                 | 47,461 |                 | 61,876  |   |
| Property and equipment, net               | 72,292                                                                                                                                                                                                           |    | 53,749               |   | 65,194               |    |
| Deferred income taxes                     | 1,222                                                                                                                                                                                                            |    | 1,926                |   | 1,702                |    |
| Other non-current assets                  | 1,592                                                                                                                                                                                                            |    | 1,755                |   | 1,365                |    |
|                                      |                                                                                                                                                                                                                  |    |                      |   |                      |    |
|                                      | Total assets                                                                                                                                                                                                     | $       | 152,533              |   | $                    | 104,891 |   | $ | 130,137 |   |
|                                      |                                                                                                                                                                                                                  |    |                      |   |                      |    |
|                                      |                                                                                                                                                                                                             |    |                 |   |                 |    |
| **LIABILITIES AND  STOCKHOLDERS' EQUITY** |                                                                                                                                                                                                             |    |                 |   |                 |    |
| Current liabilities:                      |                                                                                                                                                                                                             |    |                 |   |                 |    |
|                                      | Accounts payable                                                                                                                                                                                                 | $       | 10,924               |   | $                    | 8,037   |   | $ | 15,625 |   |
|                                      | Accrued expenses                                                                                                                                                                                                 | 10,125  |                 | 11,077 |                 | 12,192  |   |
|                                      | Accrued customer returns                                                                                                                                                                                         | 4,685   |                 | 5,519  |                 | 6,733   |   |
|                                      | Current portion of long-term debt                                                                                                                                                                                | 1,896   |                 | 3,118  |                 | 4,010   |   |
|                                      |                                                                                                                                                                                                                  |    |                      |   |                      |    |
|                                      | Total current liabilities                                                                                                                                                                                        | 27,630  |                 | 27,751 |                 | 38,560  |   |
| Long-term debt, less current portion      | 16,410                                                                                                                                                                                                           |    | 18,219               |   | 17,375               |    |
| Other non-current liabilities             | 6,878                                                                                                                                                                                                            |    | 400                  |   | 4,960                |    |
| Commitments                               |                                                                                                                                                                                                             |    |                 |   |                 |    |
| Stockholders' equity:                     |                                                                                                                                                                                                             |    |                 |   |                 |    |
|                                      | Special preferred stock (par value $0.01) 1,000,000 shares  authorized                                                                                                                                           |    |                 | -      |                 | -       |   |
|                                      | Common stock (par value $0.01) 30,000,000 shares authorized,  11,916,611, 10,016,697 and 10,156,662 shares issued and outstanding as of  June 30, 2001,  June 24, 2000 and  December 30, 2000, respectively | 119     |       | 100    |       | 102     |       |
|                                      | Additional paid-in capital                                                                                                                                                                                       | 92,499  |                 | 62,978 |                 | 63,518  |   |
|                                      | Retained earnings (accumulated deficit)                                                                                                                                                                          | 8,997   |                 | (4,557 | )                    | 5,622   |   |
|                                      |                                                                                                                                                                                                                  |    |                      |   |                      |    |
|                                      | Total stockholders' equity                                                                                                                                                                                       | 101,615 |                 | 58,521 |                 | 69,242  |   |
|                                      |                                                                                                                                                                                                                  |    |                      |   |                      |    |
|                                      | Total liabilities and stockholders' equity                                                                                                                                                                       | $       | 152,533              |   | $                    | 104,891 |   | $ | 130,137 |   |
|                                      |                                                                                                                                                                                                                  |    |                      |   |                      |    |
|                                           |                                                                                                                                                                                                                  |         |                      |        |                      |         |  |  |  |  |  |  |

Theaccompanying notes are an integral part of the consolidated financialstatements.

**THE J. JILL GROUP, INC.CONSOLIDATED STATEMENTS OFOPERATIONS(in thousands, except per share data)(unaudited)**

|                                               | **Three Months  Ended**                             |       | **Six Months Ended** |       |
|----------------------------------------------------|-----------------------------------------------------|------------|----------------------|------------|
|                                               | ****                                                |       | ****                 |       |
|                                               | **June 30,**                                        |       | **June 24,**         |       | **June 30,** |   | **June 24,** |   |
|                                               | **2001**                                            |       | **2000**             |       | **2001** |   | **2000** |   |
|                                               | ****                                                |       | ****                 |       | **** |   | **** |   |
|                                               |                                                |       | **(restated)**       |       |   |   | **(restated)** |   |
|                                               |                                                | ** ** |                 | ** ** |   | ** ** |   | ** ** |
| Net sales                                          | $                                                   | 66,193     |                 | $          | 51,494 |   | $ | 129,525 |   | $ | 100,085 |   |
| Cost of products and merchandising                 | 44,517                                              |       | 33,357               |       | 88,712 |   | 67,504 |   |
|                                               |                                                     |       |                      |       |  |   |  |   |
|                                               | Gross margin                                        | 21,676     |                 | 18,137     |   | 40,813 |   | 32,581 |   |
| Selling, general and administrative expenses       | 17,053                                              |       | 14,362               |       | 34,595 |   | 27,498 |   |
|                                               |                                                     |       |                      |       |  |   |  |   |
|                                               | Income before interest, taxes and cumulative effect | 4,623      |                 | 3,775      |   | 6,218 |   | 5,083 |   |
| Interest, net                                      | 176                                                 |       | 319                  |       | 399 |   | 604 |   |
|                                               |                                                     |       |                      |       |  |   |  |   |
|                                               | Income before taxes and cumulative effect           | 4,447      |                 | 3,456      |   | 5,819 |   | 4,479 |   |
| Income tax provision                               | 1,868                                               |       | 1,417                |       | 2,444 |   | 1,834 |   |
|                                               |                                                     |       |                      |       |  |   |  |   |
|                                               | Income before cumulative effect                     | 2,579      |                 | 2,039      |   | 3,375 |   | 2,645 |   |
| Cumulative effect of accounting change, net of tax | -                                                   |       | -                    |       | - |   | (65 | ) |
|                                               |                                                     |       |                      |       |  |   |  |   |
|                                               | Net income                                          | $          | 2,579                |       | $ | 2,039 |   | $ | 3,375 |   | $ | 2,580 |   |
|                                               |                                                     |       |                      |       |  |   |  |   |
|                                               |                                                |       |                 |       |   |   |   |   |
| **Earnings per share:**                            |                                                |       |                 |       |   |   |   |   |
|                                               |                                                |       |                 |       |   |   |   |   |
| *Basic*                                            |                                                |       |                 |       |   |   |   |   |
|                                               | Income before cumulative effect                     | $          | 0.22                 |       | $ | 0.20 |   | $ | 0.29 |   | $ | 0.26 |   |
|                                               | Cumulative effect of accounting change, net of tax  | -          |                 | -          |   | - |   | (0.01 | ) |
|                                               |                                                |            |                 |            |   |  |   |  |   |
|                                               | Net income                                          | $          | 0.22                 |       | $ | 0.20 |   | $ | 0.29 |   | $ | 0.26 |   |
|                                               |                                                     |       |                      |       |  |   |  |   |
|                                               |                                                |       |                 |       |   |   |   |   |
| *Diluted*                                          |                                                |       |                 |       |   |   |   |   |
|                                               | Income before cumulative effect                     | $          | 0.21                 |       | $ | 0.20 |   | $ | 0.27 |   | $ | 0.26 |   |
|                                               | Cumulative effect of accounting change, net of tax  | -          |                 | -          |   | - |   | (0.01 | ) |
|                                               |                                                |            |                 |            |   |  |   |  |   |
|                                               | Net income                                          | $          | 0.21                 |       | $ | 0.20 |   | $ | 0.27 |   | $ | 0.25 |   |
|                                               |                                                     |       |                      |       |  |   |  |   |
|                                               |                                                |       |                 |       |   |   |   |   |
| **Weighted average shares outstanding:**           |                                                |       |                 |       |   |   |   |   |
|                                               |                                                |       |                 |       |   |   |   |   |
|                                               | Basic                                               | 11,888     |                 | 10,013     |   | 11,577 |   | 10,010 |   |
|                                               | Diluted                                             | 12,566     |                 | 10,251     |   | 12,293 |   | 10,225 |   |

Theaccompanying notes are an integral part of the consolidated financialstatements.

**THE J. JILL GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)**

|                                                   | **Six Months Ended**                                                               |       |
|--------------------------------------------------------|------------------------------------------------------------------------------------|------------|
|                                                   | ****                                                                               |       |
|                                                   | **June 30,**                                                                       |       | **June 24,** |   |
|                                                   | **2001**                                                                           |       | **2000** |   |
|                                                   | ****                                                                               |       | **** |   |
|                                                   |                                                                               | ** ** | **(restated)** | ** ** |
|                                                   |                                                                               |       |   |   |
| Cash flows provided by operating activities:           |                                                                               |       |   |   |
|                                                   | Net income                                                                         | $          | 3,375 |   | $ | 2,580 |   |
|                                                   | Adjustments to reconcile net income to net cash provided by  operating activities: |       |     |   |   |
|                                                   | Depreciation and amortization                                                      | 3,942      |   | 2,462 |   |
|                                                   | Deferred income taxes                                                              | 372        |   | 1,833 |   |
|                                                   | Changes in assets and liabilities:                                                 |       |   |   |   |
|                                                   | Decrease in accounts receivable                                                    | 6,936      |   | 2,687 |   |
|                                                   | Increase in inventory                                                              | (1,580     | ) | (2,659 | ) |
|                                                   | Increase in prepaid catalog expenses                                               | (835       | ) | (41 | ) |
|                                                   | Increase in other assets                                                           | (1,429     | ) | (821 | ) |
|                                                   | Increase (decrease) in accounts payable                                            | (3,848     | ) | 1,510 |   |
|                                                   | Increase (decrease) in accrued expenses and other liabilities                      | (79        | ) | 2,249 |   |
|                                                   | Decrease in accrued customer returns                                               | (2,048     | ) | (1,838 | ) |
|                                                   |                                                                                    |       |  |   |
| Net cash provided by operating activities              | 4,806                                                                              |       | 7,962 |   |
|                                                   |                                                                               |       |   |   |
| Cash flows used in investing activities:               |                                                                               |       |   |   |
|                                                   | Increase in cash held in escrow                                                    | (355       | ) | (148 | ) |
|                                                   | Additions to property and equipment                                                | (11,963    | ) | (9,366 | ) |
|                                                   |                                                                                    |       |  |   |
| Net cash used in investing activities                  | (12,318                                                                            | )          | (9,514 | ) |
|                                                   |                                                                               |       |   |   |
| Cash flows provided by (used in) financing activities: |                                                                               |       |   |   |
|                                                   | Borrowings under debt agreements                                                   | 35,295     |   | - |   |
|                                                   | Payments of debt borrowings                                                        | (38,374    | ) | (898 | ) |
|                                                   | Proceeds from stock transactions                                                   | 28,998     |   | 79 |   |
|                                                   |                                                                                    |       |  |   |
| Net cash provided by (used in) financing activities    | 25,919                                                                             |       | (819 | ) |
|                                                   |                                                                               |       |   |   |
| Net increase (decrease) in cash and cash equivalents   | 18,407                                                                             |       | (2,371 | ) |
|                                                   |                                                                               |       |   |   |
| Cash and cash equivalents at:                          |                                                                               |       |   |   |
|                                                   | Beginning of period                                                                | 1,594      |   | 5,500 |   |
|                                                   |                                                                               |            |   |  |   |
|                                                   | End of period                                                                      | $          | 20,001 |   | $ | 3,129 |   |
|                                                   |                                                                                    |       |  |   |
|                                                   |                                                                               |       |   |   |
| **Supplemental information:**                          |                                                                               |       |   |   |
|                                                   |                                                                               |       |   |   |
| Non-cash investing activities:                         |                                                                               |       |   |   |
|                                                   | Construction in progress accrued, not paid                                         | $          | 812 |   | $ | 147 |   |
|                                                        |                                                                                    |            |  |  |  |  |  |  |

Theaccompanying notes are an integral part of the consolidated financialstatements.

**THE J. JILL GROUP, INC.NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS(unaudited)**

             Thefinancial statements included herein have been prepared by The J. JillGroup, Inc. (together with its wholly owned consolidated subsidiaries, the"Company"), without audit, pursuant to the rules and regulations ofthe Securities and Exchange Commission, and in the opinion of managementcontain all adjustments (consisting of normal recurring adjustments) necessaryto present fairly the financial position, results of operations and cash flowsfor the interim periods presented. Certain information and footnote disclosures normally included infinancial statements prepared in accordance with generally accepted accountingprinciples have been omitted pursuant to such rules and regulations.Accordingly, although the Company believes that the disclosures are adequate tomake the information presented not misleading, these financial statementsshould be read in conjunction with the consolidated financial statements andthe notes thereto included in the Company's Annual Report on Form 10-K forthe fiscal year ended December 30, 2000 ("fiscal 2000").  As a retailer, the Company is subject toseasonal fluctuations in net sales. The results of operations for interimperiods are not necessarily indicative of the results to be expected for thefull year.

**A.         Nature ofbusiness:**

             TheCompany is a specialty retailer of high quality women’s apparel, accessoriesand footwear that markets its products through its catalogs, retail stores ande-commerce website.

**B.         Summary ofsignificant accounting policies:**

***Cumulative******effect ofaccounting change***

             Effectiveas of December 26, 1999, the Company changed its revenue recognition policy tobe in accordance with the provisions of the Securities and ExchangeCommission’s Staff Accounting Bulletin No. 101 (“SAB 101”), *“RevenueRecognition in Financial Statements.”*  Under SAB 101, revenue is recognized at time of customer receiptrather than upon shipment of goods to the customer.  The cumulative effect of this change for periods prior to fiscal2000 totaled $65,000, net of taxes of $41,000, and is reflected in the firstquarter of fiscal 2000. In addition, as a result of this change in accountingpolicy, the consolidated financial statements for the second quarter of fiscal2000 and the six months ended June 24, 2000 have been restated.

***Reclassifications***

             Certainamounts in the prior year financial statements and related notes have beenreclassified to conform to current period presentation.

**C.         Issuance ofcommon stock:**

             OnFebruary 6, 2001, the Company issued and sold an aggregate of 1,710,000 sharesof its common stock (the “Restricted Shares”) to accredited institutionalinvestors in a private placement under Rule 506 under the Securities Act of1933.  The Restricted Shares were soldfor cash at a price of $18.00 per share, for gross proceeds of$30,780,000.  The purchase price wasestablished on January 23, 2001 and represented an 18% discount from the Nasdaqclosing price on that date.  The Companypaid a fee of 6.0% of the gross proceeds from the sale of the Restricted Sharesto the Company’s placement agent for the sale of the Restricted Shares, andincurred other expenses of approximately $227,000 in the transaction, resultingin net proceeds to the Company, after placement agent fees and other expenses,of $28,706,000. On February 21, 2001 a registration statement on Form S-3relating to resale of the Restricted Shares became effective.

**D.         Assets heldfor sale:**

             DuringDecember 2000, the Company sold its former warehouse and distribution center inMeredith, New Hampshire to a third party. This asset had been classified as assets held for sale in theaccompanying consolidated balance sheet at June 24, 2000.

**E.**          **Debt:**

             TheCompany's credit facilities at June 30, 2001 consisted of (i) a $50,000,000revolving credit facility (the “Revolving Credit Facility”);  (ii) a $12,000,000 real estate loan(the "Tilton Facility Loan"); (iii) a $9,500,000 equipment loan(the "Equipment Loan"); and (iv) a $980,000 furniture loan (the"Furniture Loan").

             TheCompany entered into the Revolving Credit Facility on June 29, 2001 to replaceits prior revolving credit facility. The Revolving Credit Facility is collateralized by substantially all thepersonal property, both tangible and intangible, of the Company.  The Revolving Credit Facility matures onJune 1, 2003 and at June 30, 2001 bore interest at 6.75% per annum.  The amount available under the RevolvingCredit Facility is reduced by outstanding borrowings and outstanding letters ofcredit.  Outstanding borrowings may notexceed $20,000,000 and bear interest at an annual rate equal to the primelending rate announced by one of the participating banks or the LIBOR lendingrate.  There were no outstandingborrowings on the Revolving Credit Facility at June 30, 2001 and none on theprior revolving credit facility at June 24, 2000.  Outstanding letters of credit totaled $22,084,000 at June 30,2001 compared to $20,208,000 under the prior revolving credit facility at June24, 2000.  Availability under theRevolving Credit Facility at June 30, 2001 was $27,916,000.  Outstanding letters of credit do not bearinterest.  The Company is required topay a commitment for of 1⁄4 of 1% per annum on the unused portion of theRevolving Credit Facility.

             TheTilton Facility Loan is collateralized by a mortgage lien on the Company’soperations and fulfillment center in Tilton, New Hampshire (the “Tiltonfacility”).  The Tilton facility isowned by Birch Pond Realty Corporation, a wholly owned subsidiary of The J.Jill Group, Inc., and leased to The J. Jill Group, Inc.  Payments of principal and interest on theTilton Facility Loan, a 10-year loan, are due monthly, based on a 20-yearamortization, with a balloon payment of the remaining balance payable onApril 1, 2009. The interest rate on the Tilton Facility Loan is fixed at7.30% per annum. The Equipment Loan is collateralized by substantially all ofthe Company's materials handling equipment. The Equipment Loan requires monthly payments of principal and interestthrough its maturity on December 1, 2005, and has a weighted averageinterest rate of 7.62% per annum.   TheFurniture Loan is collateralized by certain workstations and officefurniture.  Interest on the FurnitureLoan is fixed at 6.25% per annum and requires monthly payments of principal andinterest through its maturity on March 30, 2002.

             TheCompany’s credit facilities contain various lending conditions and covenantsincluding restrictions on permitted liens. Certain credit facilities alsorequire compliance with certain debt service coverage and other financialratios.  The Company was in compliancewith the financial covenants associated with its credit facilities as of andfor the quarters ended June 30, 2001 and June 24, 2000.  At June 30, 2001 the Company estimated thefair value of its outstanding borrowings to be $19,233,000.

             Asummary of the Company’s outstanding long-term debt follows (in thousands):

|                          | **June 30,**                         |       | **June 24,** |       | **December 30,** |       |
|-------------------------------|--------------------------------------|------------|--------------|------------|------------------|------------|
|                          | **2001**                             |       | **2000**     |       | **2000**         |       |
|                          | ****                                 |       | ****         |       | ****             |       |
|                          |                                 | ** ** |         | ** ** |             | ** ** |
| Real estate loans             | $                                    | 11,408     |         | $          | 13,032           |       | $ | 11,555 |   |
| Equipment loans               | 6,518                                |       | 7,674        |       | 7,108            |       |
| Furniture loans               | 263                                  |       | 621          |       | 458              |       |
| Revolving credit borrowings   | -                                    |       | -            |       | 2,120            |       |
| Capitalized lease obligations | 117                                  |       | 10           |       | 144              |       |
|                          |                                      |       |              |       |                  |       |
|                          | Total long-term debt                 | 18,306     |         | 21,337     |             | 21,385     |   |
| Less current maturities       | 1,896                                |       | 3,118        |       | 4,010            |       |
|                          |                                      |       |              |       |                  |       |
|                          | Long-term debt, less current portion | $          | 16,410       |       | $                | 18,219     |   | $ | 17,375 |   |
|                          |                                      |       |              |       |                  |       |

**F.          Earnings per share:**

             Areconciliation of the numerators and denominators of the basic and dilutedearnings per share (“EPS”) computation follows (in thousands, except per sharedata):

|                    | **Three Months  Ended**                            |   | **Six Months Ended** |   |
|-------------------------|----------------------------------------------------|--------|----------------------|--------|
|                    | ****                                               |   | ****                 |   |
|                    | **June 30,**                                       |   | **June 24,**         |   | **June 30,** |   | **June 24,** |   |
|                    | **2001**                                           |   | **2000**             |   | **2001** |   | **2000** |   |
|                    | ****                                               |   | ****                 |   | **** |   | **** |   |
|                    |                                               |   | **(restated)**       |   |   |   | **(restated)** |   |
| *Numerator:*            |                                               |   |                 |   |   |   |   |   |
|                    | Income before cumulative effect                    | $      | 2,579                |   | $ | 2,039 |   | $ | 3,375 |   | $ | 2,645 |   |
|                    | Cumulative effect of accounting change, net of tax | -      |                 | -      |   | - |   | (65 | ) |
|                    |                                               |        |                 |        |   |  |   |  |   |
|                    | Net income                                         | $      | 2,579                |   | $ | 2,039 |   | $ | 3,375 |   | $ | 2,580 |   |
|                    |                                                    |   |                      |   |  |   |  |   |
| *Denominator (shares):* |                                               |   |                 |   |   |   |   |   |
|                    | Basic weighted average shares outstanding          | 11,888 |                 | 10,013 |   | 11,577 |   | 10,010 |   |
|                    | Assumed exercise of stock options                  | 678    |                 | 238    |   | 716 |   | 215 |   |
|                    |                                               |        |                 |        |   |  |   |  |   |
|                    | Diluted weighted average shares outstanding        | 12,566 |                 | 10,251 |   | 12,293 |   | 10,225 |   |
|                    |                                                    |   |                      |   |  |   |  |   |
| **Earnings per share:** |                                               |   |                 |   |   |   |   |   |
| *Basic*                 |                                               |   |                 |   |   |   |   |   |
|                    | Income before cumulative effect                    | $      | 0.22                 |   | $ | 0.20 |   | $ | 0.29 |   | $ | 0.26 |   |
|                    | Cumulative effect of accounting change, net of tax | -      |                 | -      |   | - |   | (0.01 | ) |
|                    |                                               |        |                 |        |   |  |   |  |   |
|                    | Net income                                         | $      | 0.22                 |   | $ | 0.20 |   | $ | 0.29 |   | $ | 0.26 |   |
|                    |                                                    |   |                      |   |  |   |  |   |
| *Diluted*               |                                               |   |                 |   |   |   |   |   |
|                    | Income before cumulative effect                    | $      | 0.21                 |   | $ | 0.20 |   | $ | 0.27 |   | $ | 0.26 |   |
|                    | Cumulative effect of accounting change, net of tax | -      |                 | -      |   | - |   | (0.01 | ) |
|                    |                                               |        |                 |        |   |  |   |  |   |
|                    | Net income                                         | $      | 0.21                 |   | $ | 0.20 |   | $ | 0.27 |   | $ | 0.25 |   |
|                    |                                                    |   |                      |   |  |   |  |   |

             AtJune 30, 2001 and June 24, 2000, of the options then outstanding, options topurchase 90,000 and 298,775 shares of common stock, respectively, were excludedfrom the computation of diluted EPS on the basis that such options wereantidilutive. During April 2000, the Company paid $58,000 to certain optionholders as an incentive to have their options cancelled.  As a result of this incentive, a total of879,000 outstanding options were cancelled.

**G.         Commitments:**

             Duringthe six months ended June 30, 2001 the Company entered into leases for sixteenretail stores, each having terms of approximately ten years.  At June 30, 2001 the future minimum leasepayments for these sixteen operating leases were as follows (in thousands):

| Fiscal 2001 | $      | 1,359  |   |
|-------------|--------|--------|--------|
| Fiscal 2002 | 2,936  |   |
| Fiscal 2003 | 3,037  |   |
| Fiscal 2004 | 3,076  |   |
| Fiscal 2005 | 3,118  |   |
| Thereafter  | 19,686 |   |
|        |        |   |
|        | Total  | $      | 33,212 |   |
|        |        |   |
|             |        |        |        |  |

These amounts are in addition to thelease commitments identified in Note K of the Company’s Annual Report on Form10-K for fiscal 2000.

             Deferredcredits related to retail store leases are included in other non-currentliabilities in the accompanying consolidated balance sheets.

**H.         Segment information:**

             TheCompany currently has two reportable business segments, direct and retail.  Both of these segments are focused onselling J. Jill merchandise.  Eachsegment is separately managed and utilizes distinct distribution, marketing andinventory management strategies.  Thedirect segment markets merchandise through catalogs and an e-commerce website.The retail segment sells J. Jill merchandise through retail stores.  Results from the Company’s catalog outletstores and the discontinued Nicole Summers catalog are included in the directsegment.  Prior to the third quarter offiscal 2000, the Company aggregated its direct and retail segments.  Segment information for the second quarterof fiscal 2000 and the six months ended June 24, 2000 has been presented toconform to current period presentation. In addition, as a result of theCompany’s change in accounting policy associated with SAB 101, total net sales,total assets and income before interest, taxes and cumulative effect for thesecond quarter of fiscal 2000 and the six months ended June 24, 2000 have beenrestated.  Segment reporting is intendedto give financial statement users a view of the Company “through the eyes ofmanagement.”  The Company’s internalmanagement reporting is the basis for the information disclosed for itsbusiness segments.

             TheCompany evaluates its segment profitability based on the direct contribution ofeach segment.  Direct contributionrepresents each segment’s net sales less direct costs related to the segment’soperations.  Direct costs for bothsegments include merchandise acquisition and control costs and provisions formarkdowns.  Direct costs also includecatalog costs, certain order processing costs and e-commerce selling costs forthe direct segment and retail store selling, occupancy and administrative costsfor the retail segment.  Directcontribution less unallocated shared-service costs and general andadministrative expenses is equal to income before interest, taxes andcumulative effect.  Unallocatedshared-service costs include distribution and warehousing costs as well asmerchandising and product development costs. General and administrative expenses include corporate executivemanagement costs, support service costs (e.g. shared information systems,finance and human resources) and corporate headquarters occupancy costs.  Segment assets are those that are directlyused in or identified with segment operations, including inventory in stores,fixed assets primarily related to store construction, accounts receivable andother operating assets.  Unallocatedassets include corporate cash and cash equivalents, the Company’s corporateheadquarters and distribution facility, corporate information systems, deferredtax amounts, all inventory except inventory in stores, assets held for sale andother corporate assets.  Inter-segmentbalances and transactions have been eliminated.  The following tables provide financial information by segment (inthousands):

|                    | **Direct**                       |    | **Retail** |   | **Other** |   | **Total** |    |
|-------------------------|----------------------------------|---------|------------|--------|-----------|--------|-----------|---------|
|                    | ****                             |    | ****       |   | ****      |   | ****      |    |
| **Net sales (1)**       |                             |    |       |   |      |   |      |    |
|                    | Three months ended June 30, 2001 | $       | 50,451     |   | $         | 16,063 |      | $       | (321 | ) | $ | 66,193 |   |
|                    | Three months ended June 24, 2000 | 48,164  |       | 3,579  |      | (249   | )         | 51,494  |   |
|                    | Six months ended June 30, 2001   | 103,433 |       | 26,850 |      | (758   | )         | 129,525 |   |
|                    | Six months ended June 24, 2000   | 96,013  |       | 4,580  |      | (508   | )         | 100,085 |   |
|                    |                             |    |       |   |      |   |      |    |
| **Direct contribution** |                             |    |       |   |      |   |      |    |
|                    | Three months ended June 30, 2001 | 13,769  |       | 1,035  |      | *      |      | 14,804  |   |
|                    | Three months ended June 24, 2000 | 12,389  |       | (464   | )         | *      |      | 11,925  |   |
|                    | Six months ended June 30, 2001   | 25,843  |       | (160   | )         | *      |      | 25,683  |   |
|                    | Six months ended June 24, 2000   | $       | 22,528     |   | $         | (902   | )         | *       |   | $ | 21,626 |   |
|                         |                                  |         |            |        |           |        |           |         |  |  |  |  |  |

(1)         Otherrepresents certain sales allowances not specifically attributable to the director retail business segments.

 *          Not applicable

|                    | **Direct**    |   | **Retail** |   | **Unallocated  Assets** |   | **Total** |   |
|-------------------------|---------------|--------|------------|--------|-------------------------|--------|-----------|--------|
|                    | ****          |   | ****       |   | ****                    |   | ****      |   |
| **Identifiable assets** |          |   |       |   |                    |   |      |   |
|                    | June 30, 2001 | $      | 4,454      |   | $                       | 38,926 |      | $      | 109,153 |   | $ | 152,533 |   |
|                    | June 24, 2000 | $      | 4,878      |   | $                       | 10,245 |      | $      | 89,768 |   | $ | 104,891 |   |

             Thefollowing table provides a reconciliation of segment direct contribution toincome before interest, taxes and cumulative effect (in thousands):

|                                                | **Three Months  Ended** |   | **Six Months Ended** |   |
|-----------------------------------------------------|-------------------------|--------|----------------------|--------|
|                                                | ****                    |   | ****                 |   |
|                                                | **June 30,**            |   | **June 24,**         |   | **June 30,** |   | **June 24,** |   |
|                                                | **2001**                |   | **2000**             |   | **2001** |   | **2000** | ** ** |
|                                                | ****                    |   | ****                 |   | **** |   | **** |   |
|                                                |                    |   |                 |   |   |   |   |   |
| Direct contribution                                 | $                       | 14,804 |                 | $      | 11,925 |   | $ | 25,683 |   | $ | 21,626 |   |
| Unallocated shared-service costs                    | (5,466                  | )      | (4,320               | )      | (10,949 | ) | (9,310 | ) |
| General and administrative expenses                 | (4,715                  | )      | (3,830               | )      | (8,516 | ) | (7,233 | ) |
|                                                |                         |   |                      |   |  |   |  |   |
| Income before interest, taxes and cumulative effect | $                       | 4,623  |                 | $      | 3,775 |   | $ | 6,218 |   | $ | 5,083 |   |
|                                                |                         |   |                      |   |  |   |  |   |

**Item 2.  *Management’s Discussion and Analysis of FinancialCondition and Results of Operations***

             *ThisForm 10-Q, including the following discussion, contains forward–lookingstatements within the meaning of the Private Securities Litigation Reform Actof 1995 that involve substantial risks and uncertainties. For this purpose, anystatements contained herein that are not statements of historical fact may bedeemed to be forward–looking statements. Without limiting the generalityof the foregoing, the words "projected,""anticipated," "planned," "expected" and similar expressions areintended to identify forward–looking statements. In particular,statements regarding future financial targets or trends are forward-lookingstatements.  Forward-looking statementsare not guarantees of the Company’s future financial performance, and unduereliance should not be placed on them. The Company’s actual results, performance or achievements may differsignificantly from the results discussed in or implied by the forward–lookingstatements. Factors that might cause such a difference include, but are notlimited to, the following: the continued success or possible future failure ofthe retail store initiative; the ability of the Company to effectively manageits operations and growth in a multiple distribution channel environment;significant changes in customer acceptance of the Company's product offerings;changes in competition in the apparel industry; changes in consumer spending,fashion trends and consumer preferences; changes in, or the failure to complywith, federal and state tax and other government regulations; the customaryrisks of purchasing merchandise abroad, including longer lead times, higherinitial purchase commitments and foreign currency fluctuations; possible futureincreases in expenses and labor and employee benefit costs; the ability of theCompany to attract and retain qualified personnel; business abilities andjudgment of management; the existence or absence of brand awareness; theexistence or absence of publicity, advertising and promotional efforts; thesuccess or failure of operating initiatives; the mix of the Company's salesbetween full price and liquidation merchandise; general economic and businessconditions and other factors. See also Item 1A, Risk Factors, included in theCompany's Annual Report on Form 10-K for the fiscal year endedDecember 30, 2000.  The Companydisclaims any intent or obligation to update any forward-looking statements.*

***Overview***

             TheJ. Jill Group, Inc. (together with its wholly owned consolidatedsubsidiaries, the "Company"), is a specialty retailer of high qualitywomen's apparel, accessories and footwear that markets its products through itscatalogs, retail stores and e-commerce website. The Company currently has twodistinct business segments, direct and retail. Both of these segments arefocused on selling J. Jill merchandise. Each segment is separately managed and utilizes distinct distribution,marketing and inventory management strategies. The direct segment marketsmerchandise through catalogs and an e-commerce website.  The retail segment sells J. Jill merchandisethrough retail stores.

             TheCompany recorded net sales of $66.2 million during the three months ended June30, 2001 (“second quarter fiscal 2001”) compared to $51.5 million during thethree months ended June 24, 2000 (“second quarter fiscal 2000”).  Income before interest, taxes and cumulativeeffect (“operating income”) was $4.6 million, or 7.0% of net sales for second quarterfiscal 2001, compared to $3.8 million, or 7.3% of net sales for second quarterfiscal 2000.  Net income was $2.6million, or $0.21 per diluted share for second quarter fiscal 2001, compared to$2.0 million, or $0.20 per diluted share for second quarter fiscal 2000.  For the six months ended June 30, 2001, theCompany recorded net sales of $129.5 million compared to $100.1 million for thesix months ended June 24, 2000.  Operatingincome was $6.2 million, or 4.8% of net sales for the six months ended June 30,2001, compared to $5.1 million, or 5.1% of net sales for  the first six months of 2000.  Net income was $3.4 million, or $0.27 perdiluted share for the six months ended June 30, 2001, compared to $2.6 million,or $0.25 per diluted share for the six months ended June 24, 2000.

***Results ofOperations***

             Thefollowing table presents the Company's consolidated statements of operationsexpressed as a percentage of net sales and certain selected operatingdata.  Certain amounts for secondquarter fiscal 2000 and the six months ended June 24, 2000 have been restatedto conform to current period presentation. See “Cumulative Effect of Accounting Change.”

|                                               | **Three Months  Ended**                             |      | **Six Months Ended** |    |
|----------------------------------------------------|-----------------------------------------------------|-----------|----------------------|---------|
|                                               | ****                                                |      | ****                 |    |
|                                               | **June 30,**                                        |      | **June 24,**         |    | **June 30,** |   | **June 24,** |   |
|                                               | **2001**                                            |      | **2000**             |    | **2001** |   | **2000** |   |
|                                               | ****                                                |      | ****                 |    | **** |   | **** |   |
|                                               |                                                |      | **(restated)**       |    |   |   | **(restated)** |   |
|                                               |                                                |      |                 |    |   |   |   |   |
| **Consolidated Statements of Operations:**         |                                                |      |                 |    |   |   |   |   |
| Net sales                                          | 100.0                                               | %         | 100.0                | %       | 100.0 | % | 100.0 | % |
| Cost of products and merchandising                 | 67.2                                                |      | 64.8                 |    | 68.5 |   | 67.4 |   |
|                                               |                                                     |      |                      |    |  |   |  |   |
|                                               | Gross margin                                        | 32.8      |                 | 35.2    |   | 31.5 |   | 32.6 |   |
| Selling, general and administrative expenses       | 25.8                                                |      | 27.9                 |    | 26.7 |   | 27.5 |   |
|                                               |                                                     |      |                      |    |  |   |  |   |
|                                               | Income before interest, taxes and cumulative effect | 7.0       |                 | 7.3     |   | 4.8 |   | 5.1 |   |
| Interest, net                                      | 0.3                                                 |      | 0.6                  |    | 0.3 |   | 0.6 |   |
|                                               |                                                     |      |                      |    |  |   |  |   |
|                                               | Income before taxes and cumulative effect           | 6.7       |                 | 6.7     |   | 4.5 |   | 4.5 |   |
| Income tax provision                               | 2.8                                                 |      | 2.7                  |    | 1.9 |   | 1.8 |   |
|                                               |                                                     |      |                      |    |  |   |  |   |
|                                               | Income before cumulative effect                     | 3.9       |                 | 4.0     |   | 2.6 |   | 2.7 |   |
| Cumulative effect of accounting change, net of tax | -                                                   |      | -                    |    | - |   | (0.1 | ) |
|                                               |                                                     |      |                      |    |  |   |  |   |
|                                               | Net income                                          | 3.9       | %                    | 4.0     | % | 2.6 | % | 2.6 | % |
|                                               |                                                     |      |                      |    |  |   |  |   |
|                                               |                                                |      |                 |    |   |   |   |   |
| **Selected Operating Data****(1)****:**            |                                                |      |                 |    |   |   |   |   |
| ***Direct:***                                      |                                                |      |                 |    |   |   |   |   |
|                                               | Circulation (2):                                    |      |                 |    |   |   |   |   |   |
|                                               | Catalogs (in thousands)                             | 15,600    |                 | 16,100  |   | 30,900 |   | 30,900 |   |
|                                               | Square inches (in millions)                         | 96,400    |                 | 95,600  |   | 205,700 |   | 201,300 |   |
|                                               | Twelve-month buyers (3)                             | 1,015,000 |                 | 982,000 |   | 1,015,000 |   | 982,000 |   |
|                                               | Customer e-mail addresses                           | 583,000   |                 | 123,000 |   | 583,000 |   | 123,000 |   |
| ***Retail (4):***                                  |                                                |      |                 |    |   |   |   |   |
|                                               | Stores open                                         |      |                 |    |   |   |   |   |   |
|                                               | Beginning of period                                 | 24        |                 | 2       |   | 22 |   | 2 |   |
|                                               | End of period                                       | 30        |                 | 7       |   | 30 |   | 7 |   |
|                                               | Store weeks in operation (5)                        | 364       |                 | 65      |   | 658 |   | 91 |   |
| ***Total Company:***                               |                                                |      |                 |    |   |   |   |   |
|                                               | J. Jill private label credit card holders           | 235,000   |                 | 162,000 |   | 235,000 |   | 162,000 |   |
|                                                    |                                                     |           |                      |         |  |  |  |  |  |  |  |

 

| (1) | All  selected operating data exclude data related to the discontinued Nicole  Summers catalog concept.                                                                                                                                                                                                                                                                                                                                                     |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | In  order to more closely match net sales to circulation, the Company calculates  circulation on a percentage of completion basis.  Catalog circulation takes into account the total number of catalogs  mailed during all periods and the Company’s estimate of the expected sales  life of each catalog edition. Square inches circulated also takes into  account the page count and page size of the catalogs circulated during the  period. |
| (3) | As  used throughout this Form 10-Q, the term “twelve-month buyers” means  customers who have placed a catalog or e-commerce order with the Company  within the previous twelve months.                                                                                                                                                                                                                                                           |
| (4) | Retail  information relates to the Company’s retail stores only and does not include  data for the Company’s catalog outlet stores.                                                                                                                                                                                                                                                                                                              |
| (5) | The  number of store weeks in operation refers to the sum of the number of weeks  that each retail store was in operation during the period.                                                                                                                                                                                                                                                                                                               |

***Comparison of the Three and Six MonthsEnded June 30, 2001 with the Three and Six Months Ended June 24, 2000***

             Thefollowing table summarizes net sales by segment (in thousands):

|           | **Three Months  Ended** |   | **Six Months Ended** |   |
|----------------|-------------------------|--------|----------------------|--------|
|           | ****                    |   | ****                 |   |
|           | **June 30,**            |   | **June 24,**         |   | **June 30,** |   | **June 24,** |   |
|           | **2001**                |   | **2000**             |   | **2001** |   | **2000** |   |
|           | ****                    |   | ****                 |   | **** |   | **** |   |
|           |                    |   | **(restated)**       |   |   |   | **(restated)** |   |
|           |                    |   |                 |   |   |   |   |   |
| ***Direct:***  |                    |   |                 |   |   |   |   |   |
|           | J. Jill                 | $      | 50,451               |   | $ | 47,843 |   | $ | 103,416 |   | $ | 94,697 |   |
|           | Nicole Summers          | -      |                 | 321    |   | 17 |   | 1,316 |   |
|           |                         |   |                      |   |  |   |  |   |
|           | Total Direct            | 50,451 |                 | 48,164 |   | 103,433 |   | 96,013 |   |
| ***Retail***   | 16,063                  |   | 3,579                |   | 26,850 |   | 4,580 |   |
| ***Other***(1) | (321                    | )      | (249                 | )      | (758 | ) | (508 | ) |
|           |                         |   |                      |   |  |   |  |   |
|           | Total net sales         | $      | 66,193               |   | $ | 51,494 |   | $ | 129,525 |   | $ | 100,085 |   |
|           |                         |   |                      |   |  |   |  |   |
|                |                         |        |                      |        |  |  |  |  |  |  |  |  |  |  |

(1) Other represents certain salesallowances not specifically attributable to the direct or retail businesssegments.

             Netsales increased by $14.7 million, or 28.5%, to $66.2 million during secondquarter fiscal 2001 from $51.5 million during second quarter fiscal 2000.  During the six months ended June 30, 2001net sales increased by $29.4 million, or 29.4%, to $129.5 million from $100.1million during the six months ended June 24, 2000. For the three-month andsix-month periods, retail segment net sales growth accounted for 84.9% and75.6% of the Company’s total net sales growth, respectively.  During the first six months of fiscal 2001,the Company opened eight retail stores, of which six were opened during secondquarter fiscal 2001.  At June 30, 2001the Company had thirty retail stores open compared to seven at June 24, 2000.  The Company expects to have a total offorty-seven retail stores open by the end of fiscal 2001.  Within the direct segment, J. Jill net salesincreased by 5.5% and J. Jill catalog circulation decreased by 3.1% duringsecond quarter fiscal 2001 compared to second quarter fiscal 2000.  During the six months ended June 30, 2001direct segment net sales for J. Jill increased by 9.2% compared to the sixmonths ended June 24, 2000 on similar catalog circulation. These increases in direct segment net sales wereprimarily as a result of higher initial fulfillment and lower returnrates.  E-commerce net salesrepresented 25.9% of total direct segment net sales during second quarterfiscal 2001 compared to 13.5% during second quarter fiscal 2000.   During the six months ended June 30, 2001e-commerce net sales represented 24.6% of total direct segment net salescompared to 13.0% during the six months ended June 24, 2000.

             Grossmargin represents net sales less cost of products and merchandising.  Cost of products and merchandising consistsprimarily of merchandise development, control and acquisition costs, provisionsfor markdowns, order processing and customer service costs, distributionfacility costs and occupancy costs for the Company’s stores.  During second quarter fiscal 2001 grossmargin increased $3.5 million, or 19.5%, to $21.7 million from $18.1 millionduring second quarter fiscal 2000.  As apercentage of net sales, gross margin decreased to 32.8% during second quarterfiscal 2001 from 35.2% during second quarter fiscal 2000.  During the six months ended June 30, 2001gross margin increased by $8.2 million, or 25.3%, to $40.8 million from $32.6million during the six months ended June 24, 2000.   As a percentage of net sales, gross margin decreased to 31.5%during the six months ended June 30, 2001 from 32.6% during the six monthsended June 24, 2000.  These decreases ingross margin as a percentage of net sales are primarily attributable to pricingpressures from the more promotional environment this year compared to last yearand to the growing impact of the retail business on the Company’s overallresults.  Retail segment gross marginstend to be lower than direct segment gross margins because, unlike the directbusiness, the retail business does not have the benefit of leveraging its costof products over net sales that include a postage and handling incomecomponent. These decreases in gross marginas a percentage of net sales were partially offset by productivity improvementsachieved in the Company's operations and fulfillment center in Tilton, NewHampshire (the "Tilton Facility").

             Selling,general and administrative expenses consist of costs to produce, print anddistribute catalogs, as well as e-commerce website, retail store selling andcorporate administrative costs. During second quarter fiscal 2001 selling,general and administrative expenses increased by $2.7 million, or 18.7%, to$17.1 million from $14.4 million during second quarter fiscal 2000.  As a percentage of net sales, selling,general and administrative expenses decreased to 25.8% during second quarterfiscal 2001 from 27.9% during second quarter fiscal 2000.  During the six months ended June 30, 2001selling, general and administrative expenses increased by $7.1 million, or25.8%, to $34.6 million from $27.5 million during the six months ended June 24,2000.  As a percentage of net sales,selling, general and administrative expenses decreased to 26.7% during the sixmonths ended June 30, 2001 from 27.5% during the six months ended June 24, 2000.These decreases in selling, general and administrative expenses as a percentageof net sales are due to cost containment and expense leveraging across both thedirect and retail segments. In the direct segment, the cost to produce and maila catalog was comparable to last year’s levels with catalog costs per squareinch circulated slightly lower for second quarter fiscal 2001 than for secondquarter fiscal 2000 and slightly higher during the six months ended June 30,2001 than for the six months ended June 24, 2000. In the retail segment for the three-month and the six-month periods,selling cost increases were leveraged over higher sales volume increases.  Second quarter fiscal 2001 general andadministrative costs increased over the prior year primarily in the areas ofcompensation, benefits and insurance. For the six months ended June 30, 2001 these costs, as well as occupancyand depreciation costs, increased as compared to the six months ended June 24,2000.  During the first quarter offiscal 2001 the Company amended an executive split dollar life insurance policyto give the Company the ability to withdraw on a current basis the cashsurrender value of the policy with certain exceptions.  In connection with this amendment, theCompany recognized a benefit of $0.4 million in general and administrativeexpenses.

       Interest income increased to $0.2 million in second quarter fiscal 2001from $0.1 million in second quarter fiscal 2000.  Interest expense was $0.4 million during second quarter2001,  unchanged from second quarter2000.  During the six months ended June30, 2001 interest income increased to $0.4 million from $0.2 million during thesix months ended June 24, 2000. Interest expense was $0.8 million during the six months ended June 30, 2001,unchanged from the six months ended June 24, 2000.

        The Company provides for income taxes at an effective taxrate that includes the full federal and state statutory tax rates.  The Company’s effective tax rate for secondquarter fiscal 2001 and the six months ended June 30, 2001 was 42.0% comparedto 41.0% for second quarter fiscal 2000 and the six months ended June 24,2000.  The increased effective tax ratefor second quarter fiscal 2001 and the six months ended June 30, 2001 reflectsthe effect of an increased state statutory tax rate due to the Company doingbusiness in states with higher tax rates and a higher federal statutory taxrate based on taxable income levels.

***CumulativeEffect of Accounting Change***

             Effectiveas of December 26, 1999, the Company changed its revenue recognition policy tobe in accordance with the provisions of the Securities and ExchangeCommission’s Staff Accounting Bulletin No. 101 (“SAB 101”),  *“Revenue Recognition in Financial Statements.”*  Under SAB 101, revenue is recognized at timeof customer receipt rather than upon shipment of goods to the customer.  The cumulative effect of this change forperiods prior to fiscal 2000 totaled $65,000, net of taxes of $41,000, and isreflected in first quarter fiscal 2000. In addition, as a result of this change in accounting policy, theconsolidated financial statements for second quarter fiscal 2000 and the sixmonths ended June 24, 2000 have been restated.

***SegmentDirect Contribution***

             TheCompany currently has two reportable business segments, direct and retail.  Prior to the third quarter of fiscal 2000,the Company aggregated its direct and retail segments.  Segment information for second quarterfiscal 2000 and the six months ended June 24, 2000 has been presented toconform to current period presentation.

             Duringsecond quarter fiscal 2001, the direct contribution of the direct segmentincreased by $1.4 million, or 11.1%, to $13.8 million from $12.4 million duringsecond quarter fiscal 2000.  As apercentage of direct segment net sales, the direct segment’s direct contributionincreased to 27.3% during second quarter fiscal 2001 from 25.7% during secondquarter fiscal 2000.  During the sixmonths ended June 30, 2001 the direct contribution of the direct segmentincreased by $3.3 million, or 14.7%, to $25.8 million from $22.5 million duringthe six months ended June 24, 2000.  Asa percentage of direct segment net sales, the direct segment’s directcontribution increased to 25.0% during the six months ended June 30, 2001 from23.5% during the six months ended June 24, 2000. These increases in directcontribution as a percentage of net sales are primarily attributable toproductivity improvements in order processing and lower selling costs as apercentage of net sales which were partially offset be lower gross margins.

             Theretail segment generated a direct contribution during second quarter fiscal2001of $1.0 million and a direct deficit during second quarter fiscal 2000 of$0.5 million.  The retail segmentgenerated direct deficits during the six months ended June 30, 2001 and June24, 2000 of $0.2 million and $0.9 million, respectively. For the three-monthand six-month periods ended June 30, 2001, the retail segment’s directcontribution benefited from increased net sales and better leveraging ofexpenses compared to the same periods in the prior year.

***Seasonalityand Quarterly Fluctuations***

             Asthe Company’s retail business becomes a greater portion of its overallbusiness, the Company expects that its business will become more seasonal.  The addition of twenty-five new retailstores throughout fiscal 2001 is expected to materially impact year-over-yearcomparisons of the Company’s net sales. Also, January is included in the first fiscal quarter for the Companybut is included in the fourth fiscal quarter for many other retailers.  Because January is a month thattraditionally involves significant promotional pricing, this difference needsto be taken into account when making comparisons of the Company’s financialperformance for interim periods with that of other retailers.

***Liquidity andCapital Resources***

             TheCompany’s principal working capital needs arise from the need to support costsincurred in advance of revenue generation, primarily inventory acquisition andcatalog development, production and mailing costs incurred prior to thebeginning of each selling season.  TheCompany has two selling seasons that correspond to the fashion seasons.  The spring season begins in January and endsin July.  The fall season begins in Julyand ends in January.  The Company’scapital investment needs arise from initiatives identified to support thegrowth of the Company, including the retail store rollout and improvements tothe Company’s physical and operating infrastructure.  During the six months ended June 30, 2001, the Company funded itsworking capital and capital investment needs with cash generated fromoperations, borrowings under its revolving line of credit and proceeds receivedfrom its February 2001 private placement of common stock.

             On February 6, 2001, the Company issued and sold anaggregate of 1,710,000 shares of its common stock (the “Restricted Shares”) toaccredited institutional investors in a private placement under Rule 506 underthe Securities Act of 1933.  TheRestricted Shares were sold for cash at a price of $18.00 per share, for grossproceeds of $30.8 million.  The purchaseprice was established on January 23, 2001 and represented an 18% discount fromthe Nasdaq closing price on that date. The Company paid a fee of 6.0% of the gross proceeds from the sale ofthe Restricted Shares to the Company’s placement agent for the sale of theRestricted Shares, and incurred other expenses of approximately $0.2 million inthe transaction, resulting in net proceeds to the Company, after placementagent fees and other expenses, of $28.7 million.  On February 21, 2001 a registration statement on Form S-3relating to resale of the Restricted Shares became effective.

             TheCompany’s cash and cash equivalents (“cash”) increased by $18.4 million duringthe six months ended June 30, 2001 largely as a result of proceeds receivedfrom the Company’s private placement of common stock in February 2001.  In addition, $4.8 million in cash wasgenerated from operating activities during the period.  Approximately $3.1 million in cash was usedto pay down debt and $12.0 million was invested in property and equipment,primarily related to retail store construction. During the six months endedJune 30, 2001, net income before depreciation and amortization and collectionson accounts receivable were the primary sources of cash from operations.  The primary use of cash from operations wasdecreases in accounts payable.

             Accountsreceivable balances at June 30, 2001 were 81.8% lower than at December 30, 2000primarily as a result of collections associated with the Company’s deferredbilling program and landlord allowances. Accounts receivable balances at June 30, 2001 were 29.0% lower than atJune 24, 2000.

             Accountspayable balances were 30.1% lower than at December 30, 2000 and 35.9% higherthan at June 24, 2000.  The decrease inaccounts payable at June 30, 2001 compared to December 30, 2001 is primarilydue to lower amounts payable for inventory and retail store rollout costs.  The increase in accounts payable at June 30,2001 compared to June 24, 2000 is primarily related to increased amountspayable for retail store rollout costs, catalog costs and general corporateexpenses.

             Inventorylevels at June 30, 2001 were 4.2% and 61.9% higher than at December 30, 2000and June 24, 2000, respectively. Theincrease in inventory levels at June 30, 2001 compared to June 24, 2000 isprimarily attributable to the growth in the Company's retail business.  In addition, inventory balancesassociated with the direct segment reflect a better in-stock position this yearcompared to last year and, due to spring season sales volumes being lower thanexpected, the Company has more overstocks than planned at June 30, 2001.  The Company believes it has the capacity andthe liquidation vehicles necessary to liquidate its overstocks, including thosegenerated in the fiscal 2001 spring season.

             Duringthe six months ended June 24, 2000 cash and cash equivalents decreased by $2.4million. Approximately $8.0 million in cash was generated from operatingactivities during the period and $9.4 million was invested in property andequipment, primarily related to retail store and corporate headquartersconstruction. During the six months ended June 24, 2000, net income beforedepreciation and amortization, decreases in accounts receivable and increasesin accrued expenses were the primary sources of cash from operations.  Increased inventory was the primary use.

             AtJune 24, 2000 the Company owned a warehouse and distribution center inMeredith, New Hampshire.  This asset wasclassified as assets held for sale in the accompanying consolidated balancesheet at June 24, 2000.  This facilitywas sold in December 2000.  Othernon-current liabilities include deferred credits related to retail storesleases.  The increase in non-current liabilitiessince June 24, 2000 is associated with the deferred credits related to retailstores opened since that date.

              The Company's credit facilities at June 30, 2001 consisted of (i)a $50.0 million revolving credit facility (the “Revolving Credit Facility”);(ii) a $12.0 million real estate loan (the "Tilton FacilityLoan"); (iii) a $9.5 million equipment loan (the "EquipmentLoan"); and (iv) a $1.0 million furniture loan (the "FurnitureLoan").  The Company entered into the Revolving CreditFacility on June 29, 2001 to replace its prior revolving credit facility.  The Revolving Credit Facility iscollateralized by substantially all the personal property, both tangible andintangible, of the Company and matures on June 1, 2003.  The amount available under the RevolvingCredit Facility is reduced by outstanding borrowings and outstanding letters ofcredit.  Outstanding borrowings may notexceed $20.0 million and bear interest at an annual rate equal to the prime lendingrate announced by one of the participating banks or the LIBOR lendingrate.  There were no outstandingborrowings on the Revolving Credit Facility at June 30, 2001 and none on theprior revolving credit facility at June 24, 2000.  Outstanding letters of credit totaled $22.1 million at June 30,2001 compared to $20.2 million under the prior revolving credit facility atJune 24, 2000.  Availability under theRevolving Credit Facility at June 30, 2001 was $27.9 million.  Outstanding letters of credit do not bearinterest.  The Company is required topay a commitment for of 1⁄4 of 1% per annum on the unused portion of theRevolving Credit Facility.  The Tilton Facility Loan is collateralized by amortgage lien on the Tilton facility. The Tilton facility is owned by Birch Pond Realty Corporation, a whollyowned subsidiary of The J. Jill Group, Inc., and leased to The J. Jill Group,Inc. The Equipment Loan is collateralized by substantially all of the Company'smaterials handling equipment.  TheFurniture Loan is collateralized by certain workstations and officefurniture.  The weighted averageinterest rate for amounts outstanding under the Company’s credit facilitiesduring the six months ended June 30, 2001 was 7.47% per annum. The Company’scredit facilities contain various lending conditions and covenants includingrestrictions on permitted liens. Certain credit facilities also requirecompliance with certain debt service coverage and other financial ratios.  The Company was in compliance with thefinancial covenants associated with its credit facilities as of and for thequarters ended June 30, 2001 and June 24, 2000.

             TheCompany plans to open twenty-five stores during fiscal 2001.  The Company’s cash requirements related toits retail store initiative are significant and are primarily comprised ofleasehold improvements, net of tenant improvement allowances, and initialinventory acquisition costs.  Theinitial cash requirements for opening a new retail store are currentlyestimated at an average of approximately $0.7 million per store.  In addition, at June 30, 2001, the combinedfuture minimum lease payments due under the Company’s retail store leases totalapproximately $88.5 million and range between $8.4 million and $9.4 million peryear.

             TheCompany expects that the proceeds from its February 2001 stock offering, cashavailable under its existing credit facilities and cash flows from operationswill be sufficient to support the Company’s capital and operating needs through2002.  The Company expects to utilize asignificant portion of its cash generated from operations in fiscal 2001 tofund its planned retail store rollout.

**Item 3.  *Quantitative and Qualitative Disclosures about MarketRisk***

             TheCompany’s objective in managing its exposure to interest rate changes andforeign currency rate changes is to limit the material impact of the changes oncash flows and earnings and to lower its overall borrowing costs.  To achieve its objectives, the Companyidentifies these risks and manages them through its regular operating andfinancing activities, including periodic refinancing of debt obligations tolower financing costs and adjust fixed and variable rate debt positions.  The Company does not currently usederivative financial instruments or enter into foreign currency denominatedcontracts.  Management has calculatedthe effect of a 10% change in interest rates over a month and determined theeffect to be immaterial.  Managementdoes not foresee or expect any significant changes in the management of foreigncurrency or interest rate exposures or in the strategies it employs to managesuch exposures in the near future.

**PART II– OTHER INFORMATION**

 

**Item 4. *Submission of Matters to a Vote of Security Holders***

             TheCompany held an Annual Meeting of Stockholders on June 1, 2001.  At the Annual Meeting, the stockholders ofthe Company voted to approve the following actions by the following votes:

             1.          To elect the following nominees asClass B Directors of the Company:

|             | **For**   |   | **Withholding  Authority** |   |
|------------------|-----------|--------|----------------------------|--------|
|             | ****      |   | ****                       |   |
| Brett D. Heffes  | 9,818,898 |   | 27,025                     |   |
| Ruth M. Owades   | 9,789,507 |   | 56,416                     |   |
| Jonathan P. Ward | 9,818,700 |   | 27,223                     |   |

             2.          To amend the Company’s RestatedCertificate of Incorporation, as amended to date, to increase the Company’sauthorized Common Stock from 15,000,000 to 30,000,000 shares.

|    | **Number  of   Shares** |   |
|---------|-------------------------|--------|
|    | ****                    |   |
| For     | 9,306,924               |   |
| Against | 536,144                 |   |
| Abstain | 2,855                   |   |

             3.          To approve the 2001 Incentive andNon-Statutory Stock Option Plan of The J. Jill Group, Inc., under which anaggregate of 1,000,000 shares of the Company’s Common Stock will be made availablefor option grants.

|             | **Number  of  Shares** |   |
|------------------|------------------------|--------|
|             | ****                   |   |
| For              | 7,067,945              |   |
| Against          | 760,798                |   |
| Abstain          | 11,423                 |   |
| Broker non-votes | 2,005,757              |   |

**Item 6.              *Exhibits and Reports on Form 8-K***

**             (1)        Exhibits**

| **Certificate  of Incorporation and By-Laws** |
|-----------------------------------------------|
|                                          |   |
| 3.1                                           | Restated  Certificate of Incorporation of the Company (included as Exhibit 4.2 to the  Company’s Quarterly Report on Form 10-Q for the quarter ended September 25,  1993, File No. 0-22480, and incorporated herein by reference) |
|                                          |   |
| 3.2                                           | Certificate  of Amendment of Restated Certificat of Incorporation of the Company, dated  June 1, 1999 (included as Exhibit 3.2 to the Company’s Quarterly Report on  Form 10-Q for the quarter ended June 26, 1999, File No. 0-22480, and  incorporated herein by reference) |
|                                          |   |
| 3.3                                           | Certificate  of Amendment of Restated Certificate of Incorporation of the Company, dated  June 5, 2001 |
|                                          |   |
| 3.4                                           | By-Laws  of the Company, as amended (included as Exhibit 99.1 to the Company’s Current  Report on Form 8-K filed November 24, 1999, File No. 0-22480, and  incorporated herein by reference) |
|                                          |   |
| **Material  Contracts**                       |
|                                          |   |
| 10.1                                          | Fifth  Amended and Restated Loan Agreement, dated June 29, 2001, between the Company  and Citizens Bank of Massachusetts, individually and as agent for the other  lenders party to such agreement, HSBC Bank USA and Bank of New Hampshire,  N.A. (included as Exhibit 99.1 to the Company’s Current Report on Form 8-K  filed July 17, 2001, File No. 0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.2                                          | Security  Agreement, dated June 29, 2001, between the Company and Citizens Bank of  Massachusetts, as agent for the lenders (included as Exhibit 99.2 to the  Company’s Current Report on Form 8-K filed July 17, 2001, File No. 0-22480,  and incorprated herein by reference) |
|                                          |   |
| 10.3                                          | Security  Agreement, dated June 29, 2001, between The Birch Pond Group, Inc. and  Citizens Bank of Massachusetts, as agent for the lenders (included as Exhibit  99.3 to the Company’s Current Report on Form 8-K filed July 17, 2001, File  No. 0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.4                                          | Security  Agreement, dated June 29, 2001,   between QT Services Group, Inc. and Citizens Bank of Massachusetts, as  agent for the lenders (included as Exhibit 99.4 to the Company’s Current  Report on Form 8-K filed July 17, 2001, File No. 0-22480, and incorprated  herein by reference) |
|                                          |   |
| 10.5                                          | Security  Agreement, dated June 29, 2001,   between J. Jill Direct, Inc. and Citizens Bank of Massachusetts, as  agent for the lenders (included as Exhibit 99.5 to the Company’s Current  Report on Form 8-K filed July 17, 2001, File No. 0-22480, and incorprated  herein by reference) |
|                                          |   |
| 10.6                                          | Guaranty  (Unlimited), dated June 29, 2001, between The Birch Pond Group, Inc. and  Citizens Bank of Massachusetts, as agent for the lenders (included as Exhibit  99.6 to the Company’s Current Report on Form 8-K filed July 17, 2001, File  No. 0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.7                                          | Guaranty  (Unlimited), dated June 29, 2001, between QT Services Group, Inc. and  Citizens Bank of Massachusetts, as agent for the lenders (included as Exhibit  99.7 to the Company’s Current Report on Form 8-K filed July 17, 2001, File  No. 0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.8                                          | Guaranty  (Unlimited), dated June 29, 2001, between J. Jill Direct, Inc. and Citizens  Bank of Massachusetts, as agent for the lenders (included as Exhibit 99.8 to  the Company’s Current Report on Form 8-K filed July 17, 2001, File No.  0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.9                                          | Revolving  Note, dated June 29, 2001, by and between the Company and Citizens Bank of  Massachusetts (included as Exhibit 99.9 to the Company’s Current Report on  Form 8-K filed July 17, 2001, File No. 0-22480, and incorprated herein by  reference) |
|                                          |   |
| 10.10                                         | Revolving  Note, dated June 29, 2001 by and between the Company and HSBC Bank USA  (included as Exhibit 99.10 to the Company’s Current Report on Form 8-K filed  July 17, 2001, File No. 0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.11                                         | Revolving  Note, dated June 29, 2001 by and between the Company and Bank of New  Hampshire, N.A. (included as Exhibit 99.11 to the Company’s Current Report on  Form 8-K filed July 17, 2001, File No. 0-22480, and incorprated herein by  reference) |
|                                          |   |
| 10.12                                         | Pledge  Agreement, dated June 29, 2001, between the Company and Citizens Bank of  Massachusetts, as agent for the lenders (included as Exhibit 99.12 to the  Company’s Current Report on Form 8-K filed July 17, 2001, File No. 0-22480,  and incorprated herein by reference) |
|                                          |   |
| 10.13                                         | Letter  of Confirmation, dated June 29, 2001, by the Birch Pond Group, Inc. to  Citizens Bank of Massachusetts, as agent for the lenders (included as Exhibit  99.13 to the Company’s Current Report on Form 8-K filed July 17, 2001, File  No. 0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.14                                         | Letter  of Confirmation, dated June 29, 2001, by J. Jill Direct, Inc. to Citizens  Bank of Massachusetts, as agent for the lenders (included as Exhibit 99.14 to  the Company’s Current Report on Form 8-K filed July 17, 2001, File No.  0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.15                                         | Letter  of Confirmation, dated June 29, 2001, by QT Services Group, Inc. to Citizens  Bank of Massachusetts, as agent for the lenders (included as Exhibit 99.15 to  the Company’s Current Report on Form 8-K filed July 17, 2001, File No.  0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.16                                         | Grant  of Security Interest in Trademarks, dated June 29, 2001, between the Company  and Citizens Bank of Massachusetts, as agent for the lenders (included as  Exhibit 99.16 to the Company’s Current Report on Form 8-K filed July 17,  2001, File No. 0-22480, and incorprated herein by reference) |
|                                          |   |
| 10.17                                         | 2001  Incentive and Non-Statutory Stock Option Plan, as amended |

**(2)**        **Reports on Form 8-K**

             TheCompany filed the following reports on Form 8-K during the quarter ended June30, 2001:

             OnMay 2, 2001, the Company filed a report on Form 8-K relating to its earningsfor the fiscal quarter ended March 31, 2001.

**SIGNATURES**

             Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

|                         | THE  J. JILL GROUP, INC. |
|------------------------------|--------------------------|
|                         |                     |   |   |
| Dated:  August 10, 2001 | By:                      | /s/ | OLGA  L. CONLEY |
|                         |                     |  |
|                         |                     |   | Olga  L. Conley |
|                         |                     |   | Authorized  Officer |
|                         |                     |   | President  – Corporate Services, |
|                         |                     |   | Chief  Financial Officer and Treasurer |
|                         |                     |   | *(Principal  Financial Officer)* |
|                         |                     |   |   |
| Dated:  August 10, 2001 | By:                      | /s/ | PETER  J. TULP |
|                         |                     |  |
|                         |                     |   | Peter  J. Tulp |
|                         |                     |   | Authorized  Officer  Vice President – Finance and |
|                         |                     |   | Corporate  Controller |
|                         |                     |   | *(Principal  Accounting Officer)* |

**THE J.JILL GROUP, INC.**

**FORM10-Q**

**FOR THEQUARTER ENDED JUNE 30, 2001**

**EXHIBIT INDEX**

| **Certificate  of Incorporation and By-Laws** |
|-----------------------------------------------|
|                                          |   |
| 3.3                                           | Certificate  of Amendment of Restated Certificate of Incorporation of the Company, dated  June 5, 2001 |
|                                          |   |
|                                          |   |
| **Material  Contracts**                       |
|                                          |   |
| 10.17                                         | 2001  Incentive and Non-Statutory Stock Option Plan, as amended |
|                                          |   |