10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended October 27, 2012

Or

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

Commission File Number	Registrant, State of Incorporation Address and Telephone Number	I.R.S. Employer Identification No.
333-175075		22-2894486

J.CREW GROUP, INC.

(Incorporated in Delaware)

770 Broadway

New York, New York 10003

Telephone: (212) 209-2500

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	x	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock	Outstanding at November 23, 2012
Common Stock, $.01 par value per share	1,000 shares

J.CREW GROUP, INC.

TABLE OF CONTENTS – FORM 10-Q

		Page Number
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets at October 27, 2012 and January 28, 2012		3
	Condensed Consolidated Statements of Operations and Comprehensive Income for the thirteen weeks ended October 27, 2012 and October 29, 2011		4
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirty-nine weeks ended October 27, 2012 (Successor) and for the periods March 8, 2011 to October 29, 2011 (Successor) and January 30, 2011 to March 7, 2011 (Predecessor)		5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the thirty-nine weeks ended October 27, 2012 and the period March 8, 2011 to January 28, 2012		6
	Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended October 27, 2012 (Successor) and for the periods March 8, 2011 to October 29, 2011 (Successor) and January 30, 2011 to March 7, 2011 (Predecessor)		7
	Notes to Unaudited Condensed Consolidated Financial Statements		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosure About Market Risk		28
Item 4.	Controls and Procedures		28
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		29
Item 1A.	Risk Factors		29
Item 6.	Exhibits		29

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PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

J.CREW GROUP, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share data)

	October 27, 2012			January 28, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	195,675		$	221,852
Merchandise inventories		348,601			242,659
Prepaid expenses and other current assets		61,646			58,023
Prepaid income taxes		7,012			4,087
Total current assets		612,934			526,621
Property and equipment, net		321,797			264,572
Favorable lease commitments, net		38,070			48,930
Deferred financing costs, net		52,178			58,729
Intangible assets, net		977,968			985,322
Goodwill		1,686,915			1,686,915
Other assets		1,784			2,433
Total assets	$	3,691,646		$	3,573,522
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	161,523		$	158,116
Other current liabilities		154,680			116,339
Interest payable		12,983			26,735
Current portion of long-term debt		15,000			15,000
Total current liabilities		344,186			316,190
Long-term debt		1,570,000			1,579,000
Unfavorable lease commitments and deferred credits, net		65,840			53,700
Deferred income taxes, net		409,787			410,515
Other liabilities		37,896			37,065
Total liabilities		2,427,709			2,396,470
Stockholders’ equity:
Common stock $0.01 par value; 1,000 shares authorized, issued and outstanding		—			—
Additional paid-in capital		1,186,301			1,183,606
Accumulated other comprehensive loss		(20,655	)		(18,963	)
Retained earnings		98,291			12,409
Total stockholders’ equity		1,263,937			1,177,052
Total liabilities and stockholders’ equity	$	3,691,646		$	3,573,522

See notes to unaudited condensed consolidated financial statements.

3

J.CREW GROUP, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(unaudited)

(in thousands)

	Thirteen Weeks Ended October 27, 2012			Thirteen Weeks Ended October 29, 2011
Revenues:
Net sales	$	548,506		$	473,027
Other		7,302			6,548
Total revenues		555,808			479,575
Cost of goods sold, including buying and occupancy costs		292,738			277,806
Gross profit		263,070			201,769
Selling, general and administrative expenses		188,569			143,876
Income from operations		74,501			57,893
Interest expense, net of interest income		24,089			25,349
Income before income taxes		50,412			32,544
Provision for income taxes		17,233			10,944
Net income	$	33,179		$	21,600
Other comprehensive income:
Unrealized loss on cash flow hedge, net of tax		(436	)		(3,581	)
Comprehensive income	$	32,743		$	18,019

See notes to unaudited condensed consolidated financial statements.

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J.CREW GROUP, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(unaudited)

(in thousands)

	Thirty-nine Weeks Ended October 27, 2012			For the Period
				March 8, 2011 to October 29, 2011			January 30, 2011 to March 7, 2011
	(Successor)			(Successor)			(Predecessor)
Revenues:
Net sales	$	1,563,936		$	1,171,450		$	130,116
Other		20,882			19,358			3,122
Total revenues		1,584,818			1,190,808			133,238
Cost of goods sold, including buying and occupancy costs		845,223			712,066			70,284
Gross profit		739,595			478,742			62,954
Selling, general and administrative expenses		527,357			415,748			79,736
Income (loss) from operations		212,238			62,994			(16,782	)
Interest expense, net of interest income		74,860			66,588			1,166
Income (loss) before income taxes		137,378			(3,594	)		(17,948	)
Provision (benefit) for income taxes		51,496			(856	)		(1,798	)
Net income (loss)	$	85,882		$	(2,738	)	$	(16,150	)
Other comprehensive income (loss):
Unrealized loss on cash flow hedge, net of tax		(1,692	)		(15,231	)		—
Comprehensive income (loss)	$	84,190		$	(17,969	)	$	(16,150	)

See notes to unaudited condensed consolidated financial statements.

5

J.CREW GROUP, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

(in thousands, except shares)

	Common Stock				Additional paid-in			Retained		Accumulated other comprehensive			Total stockholders’
	Shares		Amount		capital			earnings		loss			equity
Balance at March 8, 2011		—	$	—	$	—		$	—	$	—		$	—
Issuance of 1,000 shares of common stock		1,000		—		1,170,693			—		—			1,170,693
Share-based compensation		—		—		12,913			—		—			12,913
Net income		—		—		—			12,409		—			12,409
Unrealized loss on cash flow hedges, net of tax		—		—		—			—		(18,963	)		(18,963	)
Balance at January 28, 2012		1,000	$	—	$	1,183,606		$	12,409	$	(18,963	)	$	1,177,052
Share-based compensation		—		—		3,213			—		—			3,213
Contribution to Parent		—		—		(518	)		—		—			(518	)
Net income		—		—		—			85,882		—			85,882
Unrealized loss on cash flow hedges, net of tax		—		—		—			—		(1,692	)		(1,692	)
Balance at October 27, 2012		1,000	$	—	$	1,186,301		$	98,291	$	(20,655	)	$	1,263,937

See notes to unaudited condensed consolidated financial statements.

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J.CREW GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Thirty-nine Weeks Ended October 27, 2012			For the Period
				March 8, 2011  to October 29, 2011			January 30, 2011 to March 7, 2011
	(Successor)			(Successor)			(Predecessor)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	85,882		$	(2,738	)	$	(16,150	)
Adjustments to reconcile to cash flows from operating activities:
Depreciation of property and equipment		52,363			41,795			3,929
Share-based compensation		3,213			47,015			1,080
Non-cash charge related to step-up in carrying value of inventory		—			30,833			—
Amortization of favorable lease commitments		10,860			8,739			—
Amortization of intangible assets		7,354			6,537			—
Amortization of deferred financing costs		7,201			6,401			970
Excess tax benefits from share-based awards		—			—			(74,495	)
Changes in operating assets and liabilities:
Merchandise inventories		(105,942	)		(55,435	)		(20,204	)
Prepaid expenses and other current assets		(3,623	)		(17,332	)		3,178
Other assets		649			921			(825	)
Accounts payable and other liabilities		40,136			30,904			(2,440	)
Federal and state income taxes		(4,514	)		39,418			3,847
Net cash provided by (used in) operating activities		93,579			137,058			(101,110	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of J.Crew Group, Inc.		—			(2,981,415	)		—
Capital expenditures		(109,588	)		(69,351	)		(2,644	)
Net cash used in investing activities		(109,588	)		(3,050,766	)		(2,644	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt		—			1,600,000			—
Proceeds from equity contributions		—			1,173,741			—
Excess tax benefit from share-based awards		—			—			74,495
Payment of debt issuance costs		—			(67,530	)		—
Proceeds from share-based compensation plans		—			—			1,130
Repayment of debt		(9,000	)		(3,000	)		—
Costs incurred in refinancing debt		(650	)		—			—
Repurchases of common stock		—			—			(20	)
Contribution to Parent		(518	)		—			—
Net cash provided by (used in) financing activities		(10,168	)		2,703,211			75,605
Decrease in cash and cash equivalents		(26,177	)		(210,497	)		(28,149	)
Beginning balance		221,852			353,211			381,360
Ending balance	$	195,675		$	142,714		$	353,211
Supplemental cash flow information:
Income taxes paid	$	56,179		$	18,082		$	—
Interest paid	$	81,351		$	48,351		$	35
Non-cash equity contribution from management shareholders	$	—		$	102,483		$	—

See notes to unaudited condensed consolidated financial statements.

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J.CREW GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the thirteen and thirty-nine weeks ended October 27, 2012 (Successor), and the periods March 8, 2011 to

October 29, 2011 (Successor), and January 30, 2011 to March 7, 2011 (Predecessor)

(Dollars in thousands, unless otherwise indicated)

1. Basis of Presentation

J.Crew Group, Inc. and its wholly owned subsidiaries (the “Company” or “Group”) was acquired (the “Acquisition”) on March 7, 2011 through a merger with a subsidiary of Chinos Holdings, Inc. (the “Parent”). The Parent was formed by investment funds affiliated with TPG Capital, L.P. (“TPG”) and Leonard Green & Partners, L.P. (“LGP” and together with TPG, the “Sponsors”). Subsequent to the Acquisition, Group became an indirect, wholly owned subsidiary of Parent, which is owned by affiliates of the Sponsors, co-investors and members of management. Prior to March 7, 2011, the Company operated as a public company with its common stock traded on the New York Stock Exchange.

Although the Company continued as the same legal entity after the Acquisition, the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows are presented for two periods: Predecessor and Successor, which relate to the period before and after the Acquisition. The Acquisition and the allocation of the purchase price were recorded as of March 7, 2011.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2012.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly in all material respects the Company’s financial position, results of operations and cash flows for the applicable interim periods. Certain prior year amounts have been reclassified to conform to current period presentation. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year as a whole.

Management is required to make estimates and assumptions about future events in preparing financial statements in conformity with generally accepted accounting principles. These estimates and assumptions affect the amounts of assets, liabilities, revenues and expenses and the disclosure of loss contingencies at the date of the unaudited condensed consolidated financial statements. While management believes that past estimates and assumptions have been materially accurate, current estimates are subject to change if different assumptions as to the outcome of future events are made. Management evaluates estimates and judgments on an ongoing basis and predicates those estimates and judgments on historical experience and on reasonable factors. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying unaudited condensed consolidated financial statements.

2. The Transactions

As discussed in note 1, the Acquisition was completed on March 7, 2011 and was financed with:

• Senior Credit Facilities of $1,450 million consisting of: (i) a $250 million, 5-year asset-based revolving credit facility (the “ABL Facility”), which was undrawn at closing, and (ii) a $1,200 million, 7-year term loan credit facility (the “Term Loan”);

• Senior unsecured 8.125% notes due 2019 (the “Notes”) of $400 million; and

• Equity investments of approximately $1.2 billion from Parent funded by the Sponsors, co-investors and management.

The Acquisition occurred simultaneously with:

• The closing of the financing transactions and equity investments described above; and

• The termination of the Company’s previous $200 million asset-based revolving credit facility.

These transactions, the Acquisition and payment of any costs related to these transactions are collectively herein referred to as the “Transactions.”

8

3. Purchase Accounting

The Acquisition was accounted for as a purchase business combination in accordance with ASC 805, Business Combinations, whereby the purchase price paid to effect the Acquisition was allocated to recognize the acquired assets and liabilities at fair value. The sources and uses of funds in connection with the Transactions are summarized below:

Sources:
Proceeds from Term Loan	$	1,200,000
Proceeds from Notes		400,000
Proceeds from equity contributions		1,225,911
Cash on hand		307,150
Total sources	$	3,133,061
Uses:
Equity purchase price	$	2,981,415
Transaction costs		151,646
Total uses	$	3,133,061

In connection with the purchase price allocation, fair values of long-lived and intangible assets were determined based upon assumptions related to the future cash flows, discount rates and asset lives utilizing currently available information, and in some cases, valuation results from independent valuation specialists. The purchase price was allocated as follows:

Purchase price	$	2,981,415
Less: net assets acquired		(571,644	)
Less: after-tax cost of post-combination share-based awards		(21,425	)
Excess of purchase price over book value of net assets acquired	$	2,388,346
Write up of tangible assets:
Property and equipment	$	35,334
Merchandise inventories		32,500
Fair market value of favorable leases		61,010
Acquisition-related intangible assets:
J.Crew brand name (indefinite lived)		885,300
Madewell brand name (20 year life)		82,000
Loyalty program and customer lists (5 year life)		27,010
Less: historical intangible assets		(4,351	)
Acquisition-related intangibles		989,959
Write down/(up) of liabilities:
Gift card liability revaluation		7,737
Deferred rent and lease incentive revaluation		66,880
Fair market value of unfavorable leases		(40,920	)
Deferred income taxes:
Long-term deferred tax asset		(20,171	)
Short-term deferred tax liability		(5,678	)
Long-term deferred tax liability		(425,220	)
Residual goodwill(1)		1,686,915
Total allocated excess purchase price	$	2,388,346

(1) Residual goodwill consists primarily of intangible assets related to the knowhow, design and merchandising of the Company’s brands that do not qualify for separate recognition in accordance with ASC 805.

9

Pro forma financial information

The following unaudited pro forma results of operations gives effect to the Transactions as if they had occurred on the first day of fiscal 2011 (January 30, 2011). The pro forma results of operations reflects adjustments (i) to record amortization and depreciation resulting from purchase accounting, (ii) to record Sponsor monitoring fees, and (iii) to eliminate non-recurring charges that were incurred in connection with the Transactions, including acquisition-related share-based compensation, transaction costs, transaction-related litigation costs and recoveries and amortization of the step-up in the carrying value of inventories. This unaudited pro forma financial information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the Transactions had actually occurred on that date, nor the results of operations in the future.

(Dollars in thousands)	For the Period January 30, 2011 to October 29, 2011
	As reported			Pro forma
Total revenues	$	1,324,046		$	1,324,046
Net income (loss)	$	(18,888	)	$	46,464

4. Transactions with Sponsors

In connection with the Transactions, the Company entered into a management services agreement with the Sponsors pursuant to which they received on the closing date an aggregate transaction fee of $35 million. In addition, pursuant to such agreement, and in exchange for on-going consulting and management advisory services, the Sponsors receive an aggregate annual monitoring fee prepaid quarterly equal to the greater of (i) 40 basis points of consolidated annual revenues or (ii) $8 million. The Sponsors also receive reimbursement for out-of-pocket expenses incurred in connection with services provided pursuant to the agreement. The Company recorded an expense of $6.8 million, in the first nine months of fiscal 2012, for monitoring fees and out-of-pocket expenses, included in selling, general and administrative expenses in the statements of operations and comprehensive income (loss).

5. Goodwill and Intangible Assets

The significant components of our intangible assets and goodwill are as follows:

	Loyalty Program and Customer Lists			Favorable Lease Commitments			Madewell Brand Name			J.Crew Brand Name		Goodwill
Balance at January 28, 2012	$	21,780		$	48,930		$	78,242		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(3,341	)		(1,025	)		—		—
Balance at April 28, 2012	$	20,354		$	45,589		$	77,217		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(3,494	)		(1,025	)		—		—
Balance at July 28, 2012	$	18,928		$	42,095		$	76,192		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(4,025	)		(1,025	)		—		—
Balance at October 27, 2012	$	17,502		$	38,070		$	75,167		$	885,300	$	1,686,915
Total accumulated amortization at October 27, 2012	$	(9,508	)	$	(22,940	)	$	(6,833	)

6. Share-Based Compensation

Chinos Holdings, Inc. 2011 Equity Incentive Plan

During the first nine months of fiscal 2012, the Parent issued 4,218,000 options to certain members of management, including (i) 1,524,000 options with an exercise price of $1.00 that become exercisable over a period of up to seven years and (ii) 2,694,000 options with an exercise price of $1.00 that only become exercisable when certain owners of the Parent receive a specified level of cash proceeds, as defined in the equity incentive plan, from the sale of their initial investment. The options have terms of up to ten years.

The weighted average grant-date fair value of the time-based awards was $0.47 per share. For the first nine months of fiscal 2012, the Company recorded an expense of $3.2 million for the time-based awards. Expense associated with the options exercisable when certain owners of the Parent receive a specified level of cash proceeds will not be recognized until that event occurs.

10

During the first nine months of fiscal 2012, the Parent issued 40,000 shares of restricted stock to a new member of the board of directors. The shares vest over two years and have a weighted average grant-date fair value of $2.17.

A summary of share-based compensation recorded in the statements of operations and comprehensive income (loss) is as follows:

	For the Period January 29, 2012 to October 27, 2012		For the Period March 8, 2011 to October 29, 2011		For the Period January 30, 2011 to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Share-based compensation	$	3,213	$	47,015	$	1,080

A summary of shares available for grant as stock options or other share-based awards is as follows:

	Shares
Available for grant at January 28, 2012		26,572,908
Granted		(4,258,000	)
Forfeited and available for reissuance		1,571,000
Available for grant at October 27, 2012		23,885,908

7. Long-Term Debt and Credit Agreements

Long-term debt consisted of the following:

	October 27, 2012			January 28, 2012
Term Loan	$	1,185,000		$	1,194,000
Notes		400,000			400,000
ABL Facility		—			—
Less current portion of Term Loan		(15,000	)		(15,000	)
Long-term debt	$	1,570,000		$	1,579,000

On October 11, 2012, the Company entered into an amendment to the ABL Facility (the “First Amendment”) that extended the scheduled maturity date to October 11, 2017. The First Amendment reduces the pricing on loans, letters of credit and fees paid on the unutilized commitments. The First Amendment also modifies certain conditions regarding financial and negative covenants. Unamortized deferred financing costs of $5.0 million at the effective date of the First Amendment will be amortized over the new five-year term.

There were no short-term borrowings under the ABL Facility during the first nine months of fiscal 2012. Outstanding standby letters of credit were $9.2 million and excess availability, as defined, was $240.8 million at October 27, 2012. Additionally, the Company has an unsecured, demand letter of credit facility with HSBC which provides for the issuance of up to $35 million of documentary letters of credit on a no fee basis. Outstanding letters of credit under this facility were $14.3 million and availability was $20.7 million at October 27, 2012.

The significant components of interest expense are as follows:

	For the Thirty-nine Weeks Ended		For the Period
	January 29, 2012 to October 27, 2012		March 8, 2011 to October 29, 2011		January 30, 2011 to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Term Loan	$	42,796	$	37,488	$	—
Notes		24,375		21,458		—
Amortization of deferred financing costs		7,201		6,401		970
Other, net of interest income		488		1,241		196
Interest expense, net	$	74,860	$	66,588	$	1,166

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8. Derivative Financial Instruments

Interest Rate Caps

In April 2011, the Company entered into interest rate cap agreements for an aggregate notional amount of $600 million in order to hedge the variability of cash flows related to a portion of the Company’s floating rate indebtedness. These cap agreements, effective in March 2012, hedge a portion of contractual floating rate interest commitments through the expiration of the agreements in March 2013. Pursuant to the agreements, the Company has capped LIBOR at 3.5% with respect to the aggregate notional amount of $600 million. In the event LIBOR exceeds 3.5% the Company will pay interest at the capped rate. In the event LIBOR is less than 3.5%, the Company will pay interest at the prevailing LIBOR. In the first nine months of fiscal 2012 the Company paid interest under the Term Loan at the prevailing LIBOR.

Interest Rate Swaps

In April 2011, the Company entered into floating-to-fixed interest rate swap agreements for an initial aggregate notional amount of $600 million to limit exposure to interest rate increases related to a portion of the Company’s floating rate indebtedness once the Company’s interest rate cap agreements expire. These swap agreements, effective March 2013, hedge a portion of contractual floating rate interest commitments through the expiration of the agreements in March 2016. As a result of the agreements, the Company’s effective fixed interest rate on the notional amount of floating rate indebtedness will be 3.56% plus the then applicable margin.

Fair Value

As of the effective date, the Company designated the interest rate cap and interest rate swap agreements as cash flow hedges. As cash flow hedges, unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The interest rate cap and interest rate swap agreements are highly correlated to the changes in interest rates to which the Company is exposed. Unrealized gains and losses on these instruments are designated as effective or ineffective. The effective portion of such gains or losses is recorded as a component of accumulated other comprehensive income or loss, while the ineffective portion of such gains or losses will be recorded as a component of interest expense. Future realized gains and losses in connection with each required interest payment will be reclassified from accumulated other comprehensive income or loss to interest expense.

The fair values of the interest rate cap and swap agreements are estimated using industry standard valuation models using market-based observable inputs, including interest rate curves (level 2 inputs). A summary of the recorded amounts included in the condensed consolidated balance sheet is as follows:

	October 27, 2012			January 28, 2012
Interest rate caps (included in other assets)	$	—		$	6
Interest rate swaps (included in other liabilities)	$	33,125		$	30,358
Accumulated other comprehensive loss, net of tax (included in stockholders’ equity)	$	(20,655	)	$	(18,963	)

9. Fair Value Measurements

The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Observable inputs, other than quoted prices included in Level 1, such as quoted prices for markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Financial assets and liabilities

The fair value of the Company’s debt is estimated to be $1,608 million and $1,542 million at October 27, 2012 and January 28, 2012 based on quoted market prices of the debt (level 1 inputs).

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In April 2011, the Company entered into interest rate cap and swap agreements in order to hedge the variability of cash flows related to a portion of the Company’s floating rate indebtedness, which are measured in the financial statements at fair value on a recurring basis. See note 8 for more information regarding the fair value of these financial assets and liabilities.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts payable and other current liabilities approximate fair value because of their short-term nature.

Non-financial assets and liabilities

Except for certain leasehold improvements, the Company does not have any non-financial assets or liabilities as of October 27, 2012 or January 28, 2012 that are measured in the financial statements at fair value.

The Company performs impairment tests of certain long-lived assets whenever there are indicators of impairment. These tests typically contemplate assets at a store level (e.g. leasehold improvements). The Company recognizes an impairment loss when the carrying value of a long-lived asset is not recoverable in light of the undiscounted future cash flows and measures an impairment loss as the difference between the carrying amount and fair value of the asset based on discounted future cash flows. The Company has determined that the future cash flow approach (level 3 inputs) provides the most relevant and reliable means by which to determine fair value in this circumstance.

A summary of the impact of the impairment of certain long-lived assets on financial condition and results of operations is as follows:

	For the Thirty-nine Weeks Ended		For the Period
	January 29, 2012 to October 27, 2012		March 8, 2011 to October 29, 2011		January 30, 2011 to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Carrying value of long-term assets written down to fair value	$	160	$	395	$	—
Impairment charge	$	160	$	395	$	—

10. Income Taxes

Group files a consolidated federal income tax return, which includes all of its wholly owned subsidiaries. Each subsidiary files separate, or combined where required, state or local tax returns in required jurisdictions. Effective for the tax year ended January 2012, the Company filed as a member of the consolidated group of Parent.

Tax returns for periods ended January 2010 through January 2012 are subject to examination by the Internal Revenue Service. The tax returns for the periods ended January 2011 and March 7, 2011 are currently under examination. Various state and local jurisdiction tax authorities are in the process of examining income tax returns or hearing appeals for certain tax years ranging from 2008 to 2010. The results of these audits and appeals are not expected to have a significant effect on the results of operations or financial position.

The difference between the U.S. statutory income tax rate of 35% and the effective tax rate for the thirty-nine weeks ended October 27, 2012 (Successor) of 37.5% is driven by state and local income taxes, partially offset by a reduction in uncertain tax positions. The difference between the U.S. statutory income tax rate of 35% and the effective tax rate the period March 8, 2011 to October 29, 2011 (Successor) and January 30, 2011 to March 7, 2011 (Predecessor) of 23.8% and 10.0%, respectively, is primarily driven by (i) the tax deductibility of certain Transaction costs and (ii) state and local income taxes, net of federal benefit.

As of October 27, 2012, the Company has $4.8 million in liabilities associated with uncertain tax positions (including interest and penalties of $1.1 million) reflected in other liabilities. The amount, if recognized, that would affect the effective tax rate is $2.4 million. During the third quarter of fiscal 2012, the Company reduced its liability for uncertain tax positions by $2.2 million due to the expiration of statute of limitations. While the Company expects the amount of unrecognized tax benefits to change in the next twelve months, the change is not expected to have a significant effect on the estimated effective annual tax rate, the results of operations or financial position. However, the outcome of tax matters is uncertain and unforeseen results can occur.

11. Legal Proceedings

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these legal proceedings, either individually or in the aggregate, would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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12. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In May 2011, a pronouncement was issued providing consistent definitions and disclosure requirements of fair value with respect to U.S. GAAP and International Financial Reporting Standards. The pronouncement changed certain fair value measurement principles and enhanced the disclosure requirements, particularly for Level 3 measurements. The changes were effective prospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this pronouncement on January 29, 2012. The adoption of this guidance did not have a significant impact on the Company’s condensed consolidated financial statements.

In June 2011, a pronouncement was issued that amended the guidance relating to the presentation of comprehensive income and its components. The pronouncement eliminates the option to present the components of other comprehensive income as part of the statement of equity and requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company adopted this pronouncement on January 29, 2012. The adoption of this guidance required changes in presentation only and therefore did not have a significant impact on the Company’s condensed consolidated financial statements.

In September 2011, a pronouncement was issued that amended the guidance for goodwill impairment testing. The pronouncement allows the entity to perform an initial qualitative assessment to determine whether it is “more likely than not” that the fair value of the reporting unit is less than its carrying amount. This assessment is used as a basis for determining whether it is necessary to perform the two step goodwill impairment test. The methodology for how goodwill is calculated, assigned to reporting units, and the application of the two step goodwill impairment test have not been revised. The pronouncement is effective for fiscal years beginning after December 15, 2011. The Company adopted this pronouncement in the fourth quarter of fiscal 2011. The adoption did not have a significant impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2011, a pronouncement was issued that amended the guidance related to the disclosure of recognized financial instruments and derivative instruments that are either offset on the balance sheet or subject to an enforceable master netting arrangement or similar agreement. The amended provisions are effective for fiscal years beginning on or after January 1, 2013, and are required to be applied retrospectively for all prior periods presented. As this pronouncement relates to disclosure only, the adoption of this amendment will not have a significant impact on the Company’s condensed consolidated financial statements.

13. Subsequent Event

Superstorm Sandy struck the East Coast on October 29, 2012, resulting in (i) personal property damage in three stores, one of which will remain closed indefinitely and (ii) temporary closures of 131 additional stores for periods of one to fourteen days.

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Forward-Looking Statements

This report contains “forward-looking statements,” which include information concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs and other information that is not historical information, including statements regarding our estimated impact on revenues as a result of Superstorm Sandy. When used in this report, the words “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, our examination of operating trends, are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and beliefs, but there can be no assurance that we will realize our expectations or that our beliefs will prove correct.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Important factors that could cause our actual results to differ include, but are not limited to, our substantial indebtedness and lease obligations, the strength of the global economy, declines in consumer spending or changes in seasonal consumer spending patterns, competitive market conditions, our ability to anticipate and timely respond to changes in trends and consumer preferences, our ability to successfully develop, launch and grow our newer concepts and execute on strategic initiatives, products offerings, sales channels and businesses, material disruption to our information systems, our ability to implement our real estate strategy, our ability to attract and retain key personnel, interruptions in our foreign sourcing operations, and other factors which are set forth in the section entitled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 28, 2012 filed with the SEC. There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date they are made and are expressly qualified in their entirety by the cautionary statements included in this report. Except as may be required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances occurring after the date they were made or to reflect the occurrence of unanticipated events.

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

This document should be read in conjunction with the Management’s Discussion and Analysis section of our Annual Report on Form 10-K for the fiscal year ended January 28, 2012 filed with the SEC. When used herein, the terms “J.Crew,” “Group,” “Company,” “we,” “us” and “our” refer to J.Crew Group, Inc., including its wholly-owned consolidated subsidiaries.

Executive Overview

J.Crew is a nationally recognized apparel and accessories retailer that differentiates itself through high standards of quality, style, design and fabrics with consistent fits and authentic details. We are an integrated multi-channel, multi-brand specialty retailer that operates stores and websites to consistently communicate with our customers. We design, market and sell our products, including those under the J.Crew^®, crewcuts^® and Madewell^® brands, offering complete assortments of women’s, men’s and children’s apparel and accessories. We believe our customer base consists primarily of affluent, college-educated, professional and fashion-conscious women and men.

We conduct our business through two primary sales channels: (1) Stores, which consists of our retail, factory and Madewell stores, and (2) Direct, which consists of our websites and catalogs. As of October 27, 2012, we operated 290 retail stores (including eight crewcuts and 43 Madewell stores), 102 factory stores (including four crewcuts factory stores), and three clearance stores, throughout the United States and Canada; compared to 266 retail stores (including 10 crewcuts and 31 Madewell stores), 94 factory stores (including three crewcuts factory stores), and three clearance stores as of October 29, 2011.

On March 7, 2011, the Company was acquired by Chinos Holdings, Inc., a company formed by investment funds affiliated with TPG and LGP (the “Acquistion”). Although the Company continued as the same legal entity after the Acquisition, we have prepared separate discussion and analysis of our consolidated operating results, financial condition and liquidity for: (i) the thirteen and thirty-nine weeks ended October 27, 2012 (Successor), (ii) the period March 8, 2011 to October 29, 2011 (Successor), and (iii) the period January 30, 2011 to March 7, 2011 (Predecessor). Additionally, we have prepared supplemental discussion and analysis of the combined periods last year before and after the Acquisition, on a pro forma basis, which we refer to as “pro forma first nine months of fiscal 2011.” The pro forma results give effect to the Acquisition as if it occurred on the first day of the fiscal year. We compare the first nine months of fiscal 2012 to the pro forma first nine months of fiscal 2011.

In connection with the Acquisition, the Company incurred significant indebtedness and became more leveraged. The purchase price paid in connection with the Acquisition has been allocated to recognize the acquired assets and liabilities at fair value. Purchase accounting adjustments have been recorded to: (i) increase the carrying value of our property and equipment, and inventory, (ii) establish intangible assets for our trade names, loyalty program, customer lists and favorable lease commitments, and (iii) revalue gift card and lease-related liabilities. Subsequent to the Acquisition, interest expense and non-cash depreciation and amortization charges have significantly increased. As a result, our Successor financial statements are not comparable to our Predecessor financial statements.

The following is a summary of our revenues for the third quarter of fiscal 2012 compared to third quarter of fiscal 2011:

(Dollars in millions)	Thirteen Weeks Ended October 27, 2012		Thirteen Weeks Ended October 29, 2011
Stores	$	391.7	$	334.5
Direct		156.8		138.5
Net sales		548.5		473.0
Other, primarily shipping and handling fees		7.3		6.6
Total revenues	$	555.8	$	479.6

Highlights of third quarter of fiscal 2012 versus third quarter of fiscal 2011:

• Revenues increased 15.9% to $555.8 million.

• Comparable company sales increased 10.4%.

• Direct net sales increased 13.2% to $156.8 million.

• Income from operations increased $16.6 million to $74.5 million.

• We opened seven J.Crew retail stores, five J.Crew factory stores, and four Madewell stores.

• We launched a new website dedicated to our J.Crew factory direct business.

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The following is a summary of our revenues for the first nine months of fiscal 2012 compared to first nine months of fiscal 2011:

(Dollars in millions)	Thirty-nine Weeks Ended October 27, 2012		Thirty-nine Weeks Ended October 29, 2011
Stores	$	1,129.8	$	926.7
Direct		434.1		374.8
Net sales		1,563.9		1,301.5
Other, primarily shipping and handling fees		20.9		22.5
Total revenues	$	1,584.8	$	1,324.0

Highlights of first nine months of fiscal 2012 versus pro forma first nine months of fiscal 2011:

• Revenues increased 19.7% to $1,584.8 million.

• Comparable company sales increased 13.2%.

• Direct net sales increased 15.8% to $434.1 million.

• Income from operations increased $166.0 million to $212.2 million.

• We opened 14 J.Crew retail stores, six J.Crew factory stores, and 12 Madewell stores. We closed one crewcuts store and one Madewell store.

• We launched a new website dedicated to our J.Crew factory direct business.

Subsequent Event

Superstorm Sandy struck the East Coast on October 29, 2012, resulting in (i) personal property damage in three of our stores, one of which will remain closed indefinitely and (ii) temporary closures of 131 additional stores for periods of one to fourteen days. We believe the impact on revenues will not be material to the results of the fourth quarter.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. A key measure used in our evaluation is comparable company sales, which includes (i) net sales from stores that have been open for at least twelve months, (ii) direct net sales, and (iii) shipping and handling fees.

A complete description of the measures we use to assess the performance of our business appears in the Management’s Discussion and Analysis section of our Annual Report on Form 10-K for the fiscal year ended January 28, 2012 filed with the SEC.

Results of Operations – Third Quarter of Fiscal 2012 compared to Third Quarter of Fiscal 2011

	Thirteen Weeks Ended October 27, 2012					Thirteen Weeks Ended October 29, 2011					Variance Increase / (Decrease)
(Dollars in millions)	Amount		Percent of Revenues			Amount		Percent of Revenues			Dollars			Percentage
Revenues	$	555.8		100.0	%	$	479.6		100.0	%	$	76.2			15.9	%
Gross profit		263.1		47.3			201.8		42.1			61.3			30.4
Selling, general and administrative expenses		188.6		33.9			143.9		30.0			44.7			31.1
Income from operations		74.5		13.4			57.9		12.1			16.6			28.7
Interest expense, net		24.1		4.3			25.3		5.3			(1.2	)		(5.0	)
Provision for income taxes		17.2		3.1			10.9		2.3			6.3			57.5
Net income	$	33.2		6.0	%	$	21.6		4.5	%	$	11.6			53.6	%

Revenues

Revenues increased $76.2 million, or 15.9%, to $555.8 million in the third quarter of fiscal 2012 from $479.6 million in the third quarter last year, driven primarily by an increase in sales of women’s apparel, specifically sweaters, knits, and pants. Comparable company sales increased 10.4% in the third quarter of fiscal 2012. Comparable company sales increased 5.4% in the third quarter of fiscal 2011.

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Stores sales increased $57.2 million, or 17.1%, to $391.7 million in the third quarter of fiscal 2012 from $334.5 million in the third quarter last year. Stores sales increased 10.3% in the third quarter of fiscal 2011. Sales from stores that have been open for less than twelve months were $43.1 million in the third quarter of fiscal 2012.

Direct sales increased $18.2 million, or 13.2%, to $156.8 million in the third quarter of fiscal 2012 from $138.5 million in the third quarter last year. Direct sales increased $20.6 million, or 17.5%, in the third quarter of fiscal 2011.

The approximate percentage of our sales by product category, based on our internal merchandising system, is as follows:

	Thirteen Weeks Ended October 27, 2012			Thirteen Weeks Ended October 29, 2011
Apparel:
Women’s		58	%		60	%
Men’s		22			21
Children’s		7			7
Accessories		13			12
		100	%		100	%

Other revenues increased $0.8 million to $7.3 million in the third quarter of fiscal 2012 from $6.6 million in the third quarter last year.

Gross Profit

Gross profit increased $61.3 million to $263.1 million in the third quarter of fiscal 2012 from $201.8 million in the third quarter last year. This increase resulted from the following factors:

	Increase/(decrease)
(Dollars in millions)	Before Purchase Accounting Impact			Last Year Purchase Accounting Impact(1)		As Reported
Increase in revenues	$	41.3		$	—	$	41.3
Increase in merchandise margin		17.3			5.8		23.1
Increase in buying and occupancy costs		(3.1	)		—		(3.1	)
Increase in gross profit	$	55.5		$	5.8	$	61.3

(1) Reflects non-cash charges related to step-up in carrying value of acquired inventories.

Gross margin increased to 47.3% in the third quarter of fiscal 2012 from 42.1% in the third quarter last year. The increase in gross margin was driven by: (i) a 300 basis point expansion in merchandise margin due to decreased markdowns, (ii) a 110 basis point increase from the purchase accounting adjustment described in the table above, and (iii) a 110 basis point decrease in buying and occupancy costs as a percentage of revenues.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $44.7 million to $188.6 million in the third quarter of fiscal 2012 from $143.9 million in the third quarter last year. This increase primarily resulted from the following:

	Increase/(decrease)
(Dollars in millions)	Before Transaction Impact		Last Year Transaction Impact		As Reported
Increase in operating expenses, primarily stores and payroll	$	19.8	$	—	$	19.8
Increase in share-based and incentive compensation		8.3		—		8.3
Increase in advertising and catalog costs		5.2		—		5.2
Increase in depreciation		2.5		—		2.5
Prior year transaction-related litigation recoveries		—		3.6		3.6
Other, net		5.3		—		5.3
Increase in selling, general and administrative expenses	$	41.1	$	3.6	$	44.7

As a percentage of revenues, selling, general and administrative expenses increased to 33.9% in the third quarter of fiscal 2012 from 30.0% in the third quarter last year. As a percentage of revenues, selling, general and administrative expenses, without the impact of Transaction-related litigation recoveries, increased to 33.9% in the third quarter of fiscal 2012 from 30.8% in the third quarter last year.

Interest Expense, Net

Interest expense, net of interest income, decreased $1.2 million to $24.1 million in the third quarter of fiscal 2012 from $25.3 million in the third quarter last year. A summary of interest expense is as follows:

(Dollars in millions)	Third Quarter Fiscal 2012			Third Quarter Fiscal 2011
Term Loan	$	14.2		$	14.3
Notes		8.1			8.1
Amortization of deferred financing costs		2.4			2.4
Other, net of interest income		(0.6	)		0.5
Interest expense, net	$	24.1		$	25.3

Provision for Income Taxes

The effective tax rate for the third quarter of fiscal 2012 was 34.2%. The difference between the statutory rate of 35% and the effective rate was driven primarily by state and local income taxes, offset by a reduction in uncertain tax positions due to the expiration of statute of limitations.

Net Income

Net income increased $11.6 million to $33.2 million in the third quarter of fiscal 2012 compared to $21.6 million in the third quarter last year. This increase was due to: (i) an increase in gross profit of $61.3 million and (ii) a decrease in interest expense of $1.2 million, offset by (iii) an increase in selling, general and administrative expenses of $44.7 million and (iv) an increase in the provision for income taxes of $6.3 million.

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Results of Operations – First Nine Months of Fiscal 2012 (Successor)

	Thirty-nine Weeks Ended October 27, 2012
(Dollars in millions)	Amount		Percent of Revenues
Revenues	$	1,584.8		100.0	%
Gross profit		739.6		46.7
Selling, general and administrative expenses		527.4		33.3
Income from operations		212.2		13.4
Interest expense, net		74.9		4.7
Provision for income taxes		51.5		3.2
Net income	$	85.9		5.4	%

Revenues

Revenues were $1,584.8 million for the first nine months of fiscal 2012. Revenues consisted of (i) Stores sales of $1,129.8 million, or 71.3% of revenues, (ii) Direct sales of $434.1 million, or 27.4% of revenues, and (iii) other revenues (primarily shipping and handling fees) of $20.9 million, or 1.3% of revenues. Revenues reflect higher than planned Stores sales.

Gross Profit

Gross profit was $739.6 million, or 46.7% of revenues, for the first nine months of fiscal 2012. Gross profit was impacted by lower than planned markdowns.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $527.4 million, or 33.3% of revenues, for the first nine months of fiscal 2012.

Interest Expense, Net

Interest expense, net of interest income, was $74.9 million for the first nine months of fiscal 2012. Interest expense reflects debt service on borrowings resulting from the Acquisition.

Provision for Income Taxes

The effective tax rate of 37.5% for the first nine months of fiscal 2012 reflects our expected annual effective tax rate. The difference between the statutory rate of 35% and the effective rate was driven primarily by state and local income taxes, net of federal benefit.

Net Income

Net income was $85.9 million for the first nine months of fiscal 2012 driven primarily by gross profit of $739.6 million offset by selling, general and administrative expenses of $527.4 million, interest expense of $74.9 million, and income tax expense of $51.5 million.

Results of Operations – For the Period March 8, 2011 to October 29, 2011 (Successor)

	For the Period March 8, 2011 to October 29, 2011
(Dollars in millions)	Amount			Percent of Revenues
Revenues	$	1,190.8			100.0	%
Gross profit		478.7			40.2
Selling, general and administrative expenses		415.7			34.9
Income from operations		63.0			5.3
Interest expense, net		66.6			5.6
Benefit for income taxes		(0.9	)		(0.1	)
Net loss	$	(2.7	)		(0.2	)%

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Revenues

Revenues were $1,190.8 million for the period March 8, 2011 to October 29, 2011. Revenues consisted of (i) Stores sales of $840.2 million, or 70.6% of revenues, (ii) Direct sales of $331.2 million, or 27.8% of revenues, and (iii) other revenues (primarily shipping and handling fees) of $19.4 million, or 1.6% of revenues. Revenues reflect lower than planned Stores sales.

Gross Profit

Gross profit was $478.7 million, or 40.2% of revenues, for the period March 8, 2011 to October 29, 2011. Gross profit was impacted by higher than planned markdowns, and includes the impact of purchase accounting of $33.4 million.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $415.7 million, or 34.9% of revenues, for the period March 8, 2011 to October 29, 2011, and include the impact of purchase accounting and transaction costs of $67.2 million.

Interest Expense, Net

Interest expense, net of interest income, was $66.6 million for the period March 8, 2011 to October 29, 2011. Interest expense reflects debt service on borrowings resulting from the Acquisition.

Provision for Income Taxes

The effective tax rate was 23.8% for the period March 8, 2011 to October 29, 2011. The difference between the statutory rate of 35% and the effective rate was driven primarily by non-deductible transaction costs and state and local income taxes, net of federal benefit.

Net Loss

Net loss was $2.7 million for the period March 8, 2011 to October 29, 2011 driven primarily by selling, general and administrative expenses of $415.7 million (including the impact of purchase accounting and transaction costs of $67.2 million) and interest expense of $66.6 million, offset by gross profit of $478.7 million.

Results of Operations – For the Period January 30, 2011 to March 7, 2011 (Predecessor)

	For the Period January 30, 2011 to March 7, 2011
(Dollars in millions)	Amount			Percent of Revenues
Revenues	$	133.2			100.0	%
Gross profit		62.9			47.2
Selling, general and administrative expenses		79.7			59.8
Income from operations		(16.8	)		(12.6	)
Interest expense, net		1.2			0.9
Provision for income taxes		(1.8	)		(1.3	)
Net income	$	(16.1	)		(12.1	)%

Revenues

Revenues were $133.2 million for the period January 30, 2011 to March 7, 2011. Revenues consisted of (i) Stores sales of $86.5 million, or 64.9% of revenues, (ii) Direct sales of $43.6 million, or 32.8% of revenues, and (iii) other revenues (primarily shipping and handling fees) of $3.1 million, or 2.3% of revenues. Revenues reflect lower than planned Stores sales and shipping and handling fees.

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Gross Profit

Gross profit was $62.9 million, or 47.2% of revenues, for the period January 30, 2011 to March 7, 2011. Gross profit was impacted by higher than planned markdowns.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $79.7 million, or 59.8% of revenues, for the period January 30, 2011 to March 7, 2011, and include transaction costs of $32.2 million.

Interest Expense, Net

Interest expense, net of interest income, was $1.2 million for the period January 30, 2011 to March 7, 2011. Interest expense reflects primarily the write off of the remaining unamortized deferred financing costs associated with the credit facility terminated in connection with the Acquisition.

Provision for Income Taxes

The effective tax rate was 10% for the period January 30, 2011 to March 7, 2011. The difference between the statutory rate of 35% and the effective rate was driven primarily by non-deductible transaction costs.

Net Loss

Net loss was $16.1 million for the period January 30, 2011 to March 7, 2011 driven primarily by selling, general and administrative expenses of $79.7 million (including transaction costs of $32.2 million), offset by gross profit of $62.9 million.

Supplemental MD&A – Results of Operations – First Nine Months Fiscal 2012 compared to Pro forma First Nine Months Fiscal 2011

(Dollars in millions)	For the Period March 8, 2011 to October 29, 2011			For the Period January 30, 2011 to March 7, 2011			Adjustments			Pro forma First Nine Months Fiscal 2011
	(Successor)			(Predecessor)
Revenues	$	1,190.8		$	133.2		$	—		$	1,324.0
Gross profit		478.7			63.0			29.3	(a)		571.0
Selling, general and administrative expenses		415.7			79.7			(77.0	)(a)		418.4
Income (loss) from operations		63.0			(16.8	)		106.3			152.6
Interest expense, net		66.6			1.2			8.6	(b)		76.4
Provision (benefit) for income taxes		(0.9	)		(1.8	)		32.4	(c)		29.7
Net income (loss)	$	(2.7	)	$	(16.1	)	$	65.3		$	46.5

Notes:

(a) To give effect to the following adjustments:

(Dollars in millions)	Adjustments
Amortization expense(1)	$	0.8
Depreciation expense(2)		0.9
Sponsor monitoring fees(3)		0.7
Amortization of lease commitments, net(4)		1.9
Elimination of non-recurring charges(5)		(110.6	)
Total pro forma adjustment	$	(106.3	)
Pro forma adjustment:
Recorded in cost of goods sold	$	(29.3	)
Recorded in selling, general and administrative expenses		(77.0	)
Total	$	(106.3	)

22

(1) To record five weeks of additional amortization expense of intangible assets for our Madewell brand name, loyalty program and customer lists amortized on a straight-line basis over their respective useful lives.

(2) To record five weeks of additional depreciation expense of the step-up of property and equipment allocated on a straight-line basis over a weighted average remaining useful life of 8.2 years.

(3) To record five weeks of additional expense (calculated as the greater of 40 basis points of consolidated annual revenues or $8 million) to be paid to the Sponsors in accordance with a management services agreement.

(4) To record five weeks of additional amortization expense of favorable and unfavorable lease commitments amortized on a straight-line basis over the remaining lease life, offset by the elimination of the amortization of historical deferred rent credits.

(5) To eliminate non-recurring charges that were incurred in connection with the Transactions, including acquisition-related share based compensation, transaction costs, transaction-related litigation costs and recoveries, and amortization of the step-up in the carrying value of inventory.

(b) To give effect to the following adjustments:

(Dollars in millions)	Adjustments
Pro forma cash interest expense(1)	$	69.2
Pro forma amortization of deferred financing costs(1)		7.2
Less historical interest expense, net		(67.8	)
Total pro forma adjustment to interest expense, net	$	8.6

(1) To record thirty-nine weeks of interest expense associated with borrowings under the Term Loan Facility and the Notes, and the amortization of deferred financing costs. Pro forma cash interest expense reflects a weighted-average interest rate of 5.6%. If LIBOR increases above 1.25%, a 0.125% increase would increase annual interest expense under the Term Loan Facility by $1.5 million.

(c) To reflect our expected annual effective tax rate of approximately 39%.

	First Nine Months Fiscal 2012					Pro Forma First Nine Months Fiscal 2011					Variance Increase / (Decrease)
(Dollars in millions)	Amount		Percent of Revenues			Amount		Percent of Revenues			Dollars			Percentage
Revenues	$	1,584.8		100.0	%	$	1,324.0		100.0	%	$	260.8			19.7	%
Gross profit		739.6		46.7			571.0		43.1			168.6			29.5
Selling, general and administrative expenses		527.4		33.3			418.4		31.6			109.0			26.0
Income from operations		212.2		13.4			152.6		11.5			59.6			39.1
Interest expense, net		74.9		4.7			76.4		5.8			(1.5	)		(2.0	)
Provision for income taxes		51.5		3.2			29.7		2.2			21.8			73.4
Net income	$	85.9		5.4	%	$	46.5		3.5	%	$	39.4			84.8	%

Revenues

Revenues increased $260.8 million, or 19.7%, to $1,584.8 million in the first nine months of fiscal 2012 from $1,324.0 million in the pro forma first nine months last year, driven primarily by an increase in sales of women’s apparel, specifically sweaters, knits, and pants. Comparable company sales increased 13.2% in the first nine months of fiscal 2012. Comparable company sales increased 2.0% in the first nine months of fiscal 2011.

Stores sales increased $203.1 million, or 21.9%, to $1,129.8 million in the first nine months of fiscal 2012 from $926.7 million in the pro forma first nine months last year. Stores sales increased $38.5 million, or 4.3%, in the first nine months of fiscal 2011. Sales from stores that have been open for less than twelve months were $121.7 million in the first nine months of fiscal 2012.

Direct sales increased $59.3 million, or 15.8%, to $434.1 million in the first nine months of fiscal 2012 from $374.8 million in the pro forma first nine months last year. Direct sales increased $40.0 million, or 12.0%, in the first nine months of fiscal 2011.

23

The approximate percentage of our sales by product category, based on our internal merchandising system, is as follows:

	First Nine Months Fiscal 2012			Pro Forma First Nine Months Fiscal 2011
Apparel:
Women’s		59	%		61	%
Men’s		22			22
Children’s		6			6
Accessories		13			11
		100	%		100	%

Other revenues, which consist primarily of shipping and handling fees, decreased $1.6 million, or 7.1%, to $20.9 million in the first nine months of fiscal 2012 from $22.5 million in the pro forma first nine months last year. This decrease resulted primarily from shipping and handling promotions, partially offset by the impact of shipping and handling income from increased Direct sales.

Gross Profit

Gross profit increased $168.6 million to $739.6 million in the first nine months of fiscal 2012 from $571.0 million in the pro forma first nine months last year. This increase resulted from the following factors:

(Dollars in millions)	Increase (decrease)
Increase in revenues	$	145.7
Increase in merchandise margin		36.6
Increase in buying and occupancy costs		(13.7	)
Increase in gross profit	$	168.6

Gross margin increased to 46.7% in the first nine months of fiscal 2012 from 43.1% in the pro forma first nine months last year. The increase in gross margin was driven by: (i) a 230 basis point expansion in merchandise margin due to decreased markdowns and (ii) a 130 basis point decrease in buying and occupancy costs as a percentage of revenues.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $109.0 million, or 26.0%, to $527.4 million in the first nine months of fiscal 2012 from $418.4 million in the pro forma first nine months last year. This increase primarily resulted from the following:

(Dollars in millions)	Increase
Increase in operating expenses, primarily stores and payroll	$	53.0
Increase in share-based and incentive compensation		25.0
Increase in advertising and catalog costs		15.1
Increase in depreciation		5.7
Other, net		10.2
Increase in selling, general and administrative expenses	$	109.0

As a percentage of revenues, selling, general and administrative expenses increased to 33.3% in the first nine months of fiscal 2012 from 31.6% in the pro forma first nine months last year.

Interest Expense, Net

Interest expense, net of interest income, decreased $1.5 million to $74.9 million in the first nine months of fiscal 2012 from $76.4 million in the pro forma first nine months last year. A summary of interest expense is as follows.

(Dollars in millions)	First Nine Months Fiscal  2012		Pro Forma First Nine  Months Fiscal 2011
Term Loan	$	42.8	$	43.1
Notes		24.4		24.4
Amortization of deferred financing costs		7.2		7.2
Other, net of interest income		0.5		1.7
Interest expense, net	$	74.9	$	76.4

24

Income Taxes

The effective tax rate for the first nine months of fiscal 2012 was 37.5%. The difference between the statutory rate of 35% and the effective rate was driven primarily by state and local income taxes, partially offset by a reduction in uncertain tax positions due to the expiration of statute of limitations.

Net Income

Net income increased $39.4 million to $85.9 million in the first nine months of fiscal 2012 compared to $46.5 million in the pro forma first nine months last year. This increase was due to: (i) an increase in gross profit of $168.6 million and (ii) a decrease in interest expense of $1.5 million, offset by (iii) an increase in selling, general and administrative expenses of $109.0 million and (iv) an increase in the provision for income taxes of $21.8 million.

Liquidity and Capital Resources

Our primary sources of liquidity are our current balances of cash and cash equivalents, cash flows from operations and borrowings available under the ABL Facility. Our primary cash needs are capital expenditures in connection with opening new stores and remodeling our existing stores, investments in our distribution network, making information technology system enhancements, meeting debt service requirements and funding working capital requirements. The most significant components of our working capital are cash and cash equivalents, merchandise inventories, accounts payable and other current liabilities. See “—Outlook” below.

Operating Activities

(Dollars in millions)	For the  Thirty-nine Weeks ended October 27, 2012			For the  Period March 8, 2011 to October 29, 2011			For the Period January 30, 2011 to March 7, 2011
	(Successor)			(Successor)			(Predecessor)
Net income (loss)	$	85.9		$	(2.7	)	$	(16.1	)
Adjustments to reconcile to cash flows from operating activities:
Depreciation of property and equipment		52.4			41.8			3.9
Share-based compensation		3.2			47.0			1.1
Non-cash charge related to step-up in carrying value of inventory		—			30.8			—
Amortization of favorable lease commitments		10.9			8.7			—
Amortization of intangible assets		7.3			6.5			—
Amortization of deferred financing costs		7.2			6.4			1.0
Excess tax benefit from share-based awards		—			—			(74.5	)
Changes in operating assets and liabilities		(73.3	)		(1.5	)		(16.5	)
Net cash provided by (used in) operating activities	$	93.6		$	137.0		$	(101.1	)

Cash provided by operating activities of $93.6 million in the first nine months of fiscal 2012 (Successor) was driven by: (i) net income of $85.9 million, (ii) non-cash expenses of $81.0 million, offset by (iii) changes in operating assets and liabilities of $73.3 million due to seasonal working capital fluctuations and an increase in accrued incentive compensation.

Cash provided by operating activities of $137.0 million in the period March 8, 2011 to October 29, 2011 (Successor) was driven by: (i) non-cash expenses of $141.2 million offset by (ii) changes in operating assets and liabilities of $1.5 million and (iii) net loss of $2.7 million.

Cash used in operating activities of $101.1 million in the period January 30, 2011 to March 7, 2011 (Predecessor) resulted from: (i) net loss of $16.1 million, (ii) changes in operating assets and liabilities of $91.0 million (including the impact of excess tax benefits from share-based compensation plans) due primarily to an increase in refundable income taxes resulting from the Acquisition and seasonal working capital fluctuations, offset by (iii) non-cash expenses of $6.0 million.

25

Investing Activities

	For the Thirty-nine Weeks ended October 27, 2012		For the Period March 8, 2011 to October 29,  2011		For the Period January 30, 2011 to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Capital expenditures:
New stores	$	43.1	$	25.5	$	0.6
Information technology		29.0		10.6		1.1
Other(1)		37.5		33.3		0.9
Net cash used in investing activities	$	109.6	$	69.4	$	2.6

(1) Includes capital expenditures for warehouse and corporate office expansion, store renovations and general corporate purposes.

Capital expenditures are planned at approximately $135 million for fiscal year 2012, including $55 million for new stores, $40 million for information technology enhancements, $25 million for warehouse and corporate office expansion, and the remainder for store renovations and general corporate purposes.

Financing Activities

	For the Thirty-nine Weeks ended October 27, 2012			For the Period March 8, 2011 to October 29,  2011			For the Period January 30, 2011 to March 7, 2011
	(Successor)			(Successor)			(Predecessor)
Proceeds from debt	$	—		$	1,600.0		$	—
Proceeds from equity contributions		—			1,173.7			—
Excess tax benefit from share-based awards		—			—			74.5
Payment of debt issuance costs		—			(67.5	)		—
Proceeds from share-based compensation plans		—			—			1.1
Repayment of debt		(9.0	)		(3.0	)		—
Costs incurred in refinancing debt		(0.7	)		—			—
Contribution to Parent		(0.5	)		—			—
Net cash provided by (used in) financing activities	$	(10.2	)	$	2,703.2		$	75.6

Cash used in financing activities was $10.2 million in the first nine months of fiscal 2012 resulting primarily from quarterly principal repayments of debt under the Term Loan.

Cash provided by financing activities was $2,703.2 million from March 8, 2011 to October 29, 2011 resulting from the proceeds from debt and equity contributions in connection with the Acquisition, offset primarily by the payment of debt issuance costs.

Cash provided by financing activities was $75.6 million from January 30, 2011 to March 7, 2011 resulting primarily from the tax benefits from share-based compensation plans.

ABL Facility

On October 11, 2012, the Company entered into an amendment to the ABL Facility (the “First Amendment”), with Bank of America, N.A., as administrative agent and the other agents and lenders party thereto, that modifies the $250 million senior-secured financing (which may be increased by up to $75 million in certain circumstances), subject to a borrowing base limitation. The borrowing base will equal the sum of: 90% of the eligible credit card receivables; plus, 85% of eligible accounts; plus, 90% (or 92.5% for the period of August 1 through December 31 of any fiscal year) of the net recovery percentage of eligible inventory multiplied by the cost of eligible inventory; plus, 85% of the net recovery percentage of eligible letters of credit inventory, multiplied by the cost of eligible letter of credit inventory; plus, 85% of the net recovery percentage of eligible in-transit inventory, multiplied by the cost of eligible in-transit inventory; plus, 100% of qualified cash; minus, all availability and inventory reserves. The ABL Facility includes borrowing capacity in the form of letters of credit up to the entire amount of the facility, and up to $25 million in U.S. dollars for borrowings on same-day notice, referred to as swingline loans, and is available in U.S. dollars, Canadian dollars and Euros. The Company did not incur loans under the ABL Facility at the closing of the Acquisition through October 27, 2012. Any amounts outstanding under the ABL Facility are due and payable in full on the fifth anniversary of the First Amendment.

26

Borrowings under the ABL Facility bear interest at a rate per annum equal to, at Group’s option, any of the following, plus, in each case, an applicable margin: (a) in the case of borrowings in U.S. dollars, a base rate determined by reference to the highest of (1) the prime rate of Bank of America, N.A., (2) the federal funds effective rate plus 0.50% and (3) a LIBOR determined by reference to the costs of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00%; (b) in the case of borrowings in U.S. dollars or in Euros, a LIBOR determined by reference to the costs of funds for deposits in the relevant currency for the interest period relevant to such borrowing adjusted for certain additional costs; (c) in the case of borrowings in Canadian dollars, the average offered rate for Canadian dollar bankers’ acceptances having an identical term of the applicable borrowing; and (d) in the case of borrowings in Canadian dollars, a fluctuating rate determined by reference to the higher of (1) the average offered rate for 30 day Canadian dollar bankers’ acceptances plus 0.50% and (2) the prime rate of Bank of America, N.A. for loans in Canadian dollars. The applicable margin for borrowings under the ABL Facility varies based on Group’s average historical excess availability from 0.50% to 1.00% with respect to base rate borrowings and borrowings in Canadian dollars bearing interest at the rate described in the immediately preceding clause (d), and from 1.50% to 2.00% with respect to LIBOR borrowings and borrowings in Canadian dollars bearing interest at the rate described in the immediately preceding clause (c).

All obligations under the ABL Facility are unconditionally guaranteed by Group’s immediate parent and certain of Group’s existing and future wholly owned domestic subsidiaries (referred to herein as the subsidiary guarantors) and are secured, subject to certain exceptions, by substantially all of Group’s assets and the assets of Group’s immediate parent and the subsidiary guarantors, including, in each case subject to customary exceptions and exclusions:

• a first-priority security interest in personal property consisting of accounts receivable, inventory, cash, deposit accounts (other than any designated deposit accounts containing solely the proceeds of collateral with respect to which the obligations under the ABL Facility have only a second-priority security interest), securities accounts, commodities accounts and certain assets related to the foregoing and, in each case, proceeds thereof (such property, the “Current Asset Collateral”);

• a second-priority pledge of all of Group’s capital stock directly held by Group’s immediate parent and a second priority pledge of all of the capital stock directly held by Group and any subsidiary guarantors (which pledge, in the case of the capital stock of each (a) domestic subsidiary that is directly owned by Group or by any subsidiary guarantor and that is a disregarded entity for United States Federal income tax purposes substantially all of the assets of which consist of equity interests in one or more foreign subsidiaries or (b) foreign subsidiary, is limited to 65% of the stock of such subsidiary); and

• a second-priority security interest in substantially all other tangible and intangible assets, including substantially all of the Company’s owned real property and intellectual property.

The ABL Facility includes restrictions on Group’s ability and the ability of certain of its subsidiaries to, among other things, incur or guarantee additional indebtedness, pay dividends (including to the Parent) on, or redeem or repurchase, capital stock, make certain acquisitions or investments, materially change its business, incur or permit to exist certain liens, enter into transactions with affiliates or sell its assets to, or merge or consolidate with or into, another company. In addition, from the time when excess availability under the ABL Facility is less than the greater of (a) 10.0% of the lesser of (1) the commitment amount and (2) the borrowing base and (b) $20 million, until the time when Group has excess availability under the ABL Facility equal to or greater than the greater of (a) 10.0% of the lesser of (1) the commitment amount and (2) the borrowing base and (b) $20 million for 30 consecutive days, the credit agreement governing the ABL Facility requires Group to maintain a Fixed Charge Coverage Ratio (as defined in the ABL Facility) tested as of the last day of each fiscal quarter that shall not be less than 1.0.

Although Group’s immediate parent is not generally subject to the negative covenants under the ABL Facility, such parent is subject to a holding company covenant that limits its ability to engage in certain activities.

The credit agreement governing the ABL Facility additionally contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default, including without limitation, a cross-default according to the terms of any indebtedness with an aggregate principal amount of $35 million or more. If an event of default occurs under the ABL Facility, the lenders may declare all amounts outstanding under the ABL Facility immediately due and payable. In such event, the lenders may exercise any rights and remedies they may have by law or agreement, including the ability to cause all or any part of the collateral securing the ABL Facility to be sold.

There were no short-term borrowings during the first nine months of fiscal 2012. Outstanding standby letters of credit were $9.2 million and excess availability, as defined, was $240.8 million at October 27, 2012.

Demand Letter of Credit Facility

The Company has an unsecured, demand letter of credit facility with HSBC which provides for the issuance of up to $35 million of documentary letters of credit on a no fee basis. Outstanding letters of credit were $14.3 million and availability was $20.7 million at October 27, 2012.

27

Outlook

Our short-term and long-term liquidity needs arise primarily from (i) capital expenditures, (ii) debt service requirements, including quarterly principal payments and repayments based on annual excess cash flows as defined, and (iii) working capital needs. Management anticipates that capital expenditures will be approximately $135 million for fiscal 2012, including approximately $55 million for new stores, approximately $40 million for information technology enhancements, approximately $25 million for warehouse and corporate office expansion, and the remainder for store renovations and general corporate purposes. Management believes that our current balances of cash and cash equivalents, cash flow from operations and availability under the ABL Facility will be adequate to finance debt service requirements, planned capital expenditures and working capital needs for the next twelve months. Our ability to make planned capital expenditures, to fund our debt service requirements and to remain in compliance with the financial covenants, and to fund our operations depends on our future operating performance, which in turn, may be impacted by prevailing economic conditions and other financial and business factors, some of which are beyond our control.

Off Balance Sheet Arrangements

We enter into documentary letters of credit to facilitate the international purchase of merchandise. We also enter into standby letters of credit to secure reimbursement obligations under certain insurance and trade programs. As of October 27, 2012, we had the following obligations under letters of credit in future periods:

	Total		Within 1 Year		2-3 Years		4-5 Years		After 5 Years
	(amounts in millions)
Letters of Credit
Standby	$	9.2	$	9.2	$	—	$	—	$	—
Documentary		14.3		14.3		—		—		—
	$	23.5	$	23.5	$	—	$	—	$	—

Cyclicality and Seasonality

The industry in which we operate is cyclical, and consequently our revenues are affected by general economic conditions. Purchases of apparel and accessories are sensitive to a number of factors that influence the levels of consumer spending, including economic conditions and the level of disposable consumer income, consumer debt, interest rates and consumer confidence.

Our business is seasonal. As a result, our revenues fluctuate from quarter to quarter. We have four distinct selling seasons that align with our four fiscal quarters. Revenues are usually higher in our fourth fiscal quarter, particularly December, as customers make holiday purchases. Our working capital requirements also fluctuate throughout the year, increasing substantially in September and October in anticipation of holiday season inventory requirements.

Critical Accounting Policies

A summary of our critical accounting policies is included in the Management’s Discussion and Analysis section of our Annual Report on Form 10-K for the fiscal year ended January 28, 2012 filed with the SEC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Borrowings under the Senior Credit Facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on our variable rate indebtedness will increase even though the amount borrowed would remain the same, and our net income and cash flow, including cash available for servicing our indebtedness, will correspondingly decrease. If LIBOR increases above 1.25%, a 0.125% increase in the floating rate applicable to the $1,185 million outstanding under the Term Loan Facility would result in a $1.5 million increase in our annual interest expense. Assuming all revolving loans are drawn under the $250 million ABL Facility, a 0.125% change in the floating rate would result in a $0.3 million change in our annual interest expense. We have entered into interest rate swaps and caps in order to hedge the volatility of cash flows related to a portion of the Company’s floating rate indebtedness (see note 8 to the unaudited condensed consolidated financial statements). These hedges may not fully mitigate our interest rate risk, or may not be effective.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

There were no changes in internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

28

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these legal proceedings, either individually or in the aggregate, would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

The Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2012 includes a detailed discussion of certain risks that could materially adversely affect our business, our operating results, or our financial condition. There have been no material changes to the risk factors previously disclosed.

ITEM 6. EXHIBITS

Articles of Incorporation and Bylaws

Exhibit No.	Document
3.1	Amended and Restated Certificate of Incorporation of J.Crew Group, Inc., adopted March 7, 2011. Incorporated by reference to Exhibit 3.1 to the Form 8-K filed on March 10, 2011.
3.2	Amended and Restated By-laws of J.Crew Group, Inc., adopted March 7, 2011. Incorporated by reference to Exhibit 3.2 to the Form 8-K filed on March 10, 2011.

Material Contracts

Exhibit No.	Document
10.1	First Amendment to Credit Agreement, dated as of October 11, 2012, by and among J. Crew Group, Inc., Chinos Intermediate Holdings B, Inc., Bank of America, N.A., as administrative agent and as collateral agent, and each lender party thereto. Incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 15, 2012.

Certifications

Exhibit No.	Document
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

Interactive Data Files

Exhibit No.

Document

101

Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at October 27, 2012 and January 28, 2012, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteen weeks ended October 27, 2012 and October 29, 2011, (iii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirty-nine weeks ended October 27, 2012 and for the periods March 8, 2011 to October 29, 2011 and January 30, 2011 to March 7, 2011, (iv) the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the thirty-nine weeks ended October 27, 2012 and for the period March 8, 2011 to January 28, 2012, (v) the Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended October 27, 2012 and for the periods March 8, 2011 to October 29, 2011 and January 30, 2011 to March 7, 2011, and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements.**

* Filed herewith.

** Furnished herewith.

29

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	J.CREW GROUP, INC.
	(Registrant)
Date: November 28, 2012	By:	/s/    MILLARD DREXLER
		Millard Drexler
		Chairman of the Board and Chief Executive Officer
Date: November 28, 2012	By:	/s/    STUART C. HASELDEN
		Stuart C. Haselden
		Chief Financial Officer

30

EXHIBIT INDEX

Articles of Incorporation and Bylaws

Exhibit No.	Document
3.1	Amended and Restated Certificate of Incorporation of J.Crew Group, Inc., adopted March 7, 2011. Incorporated by reference to Exhibit 3.1 to the Form 8-K filed on March 10, 2011.
3.2	Amended and Restated By-laws of J.Crew Group, Inc., adopted March 7, 2011. Incorporated by reference to Exhibit 3.2 to the Form 8-K filed on March 10, 2011.

Material Contracts

Exhibit No.	Document
10.1	First Amendment to Credit Agreement, dated as of October 11, 2012, by and among J. Crew Group, Inc., Chinos Intermediate Holdings B, Inc., Bank of America, N.A., as administrative agent and as collateral agent, and each lender party thereto. Incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 15, 2012.

Certifications

Exhibit No.	Document
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

Interactive Data Files

Exhibit No.

Document

101

Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at October 27, 2012 and January 28, 2012, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteen weeks ended October 27, 2012 and October 29, 2011, (iii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirty-nine weeks ended October 27, 2012 and for the periods March 8, 2011 to October 29, 2011 and January 30, 2011 to March 7, 2011, (iv) the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the thirty-nine weeks ended October 27, 2012 and for the period March 8, 2011 to January 28, 2012, (v) the Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended October 27, 2012 and for the periods March 8, 2011 to October 29, 2011 and January 30, 2011 to March 7, 2011, and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements.**

* Filed herewith.

** Furnished herewith.

31

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Millard Drexler, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of J.Crew Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 28, 2012

/S/    MILLARD DREXLER

Millard Drexler

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Stuart C. Haselden, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of J.Crew Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 28, 2012

/S/    STUART C. HASELDEN

Stuart C. Haselden

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of J.Crew Group, Inc. (the “Company”) on Form 10-Q for the period ended October 27, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Millard Drexler, Chief Executive Officer of the Company, and Stuart C. Haselden, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 28, 2012

/s/    MILLARD DREXLER

Millard Drexler

Chief Executive Officer

/s/    STUART C. HASELDEN

Stuart C. Haselden

Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Derivative Financial Instruments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Apr. 30, 2011
Interest Rate Swap
Derivative [Line Items]
Aggregate notional amount of interest rate derivative	$ 600
Interest rate derivative, expiration date	2016-03
Interest rate derivative, fixed interest rate above applicable margin	3.56%
Interest Rate Caps
Derivative [Line Items]
Aggregate notional amount of interest rate derivative	$ 600
Interest rate derivative, capped interest rate	3.50%
Interest rate derivative, expiration date	2013-03
Interest rate derivative, interest rate	In the event LIBOR exceeds 3.5% the Company will pay interest at the capped rate. In the event LIBOR is less than 3.5%, the Company will pay interest at the prevailing LIBOR. In the first nine months of fiscal 2012 the Company paid interest under the Term Loan at the prevailing LIBOR.

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Share-Based Compensation - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Oct. 27, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards options granted	4,258,000
Options without exercise conditions
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards options granted	1,524,000
Stock options exercise price	1.00
Options without exercise conditions | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option plans expiration period	7 years
Options exercisable when certain owners receive a specified level of cash proceeds from sale of initial investment
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards options granted	2,694,000
Stock options exercise price	1.00
Options exercisable when certain owners receive a specified level of cash proceeds from sale of initial investment | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option plans expiration period	10 years
Time-based awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant-date fair value of time-base awards	0.47
Share-based compensation costs included in selling, general and administrative expenses	3.2
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted in period	40,000
Shares vesting period	2 years
Weighted average grant-date fair value, per share	2.17
Management
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards options granted	4,218,000

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Fair Value Measurements (Tables)

9 Months Ended

Oct. 27, 2012

Impact of Impairment of Certain Long-Lived Assets on Financial Condition and Results of Operations

A summary of the impact of the impairment of certain long-lived assets on financial condition and results of operations is as follows:

	For the Thirty-nine Weeks Ended		For the Period
	January 29, 2012  to October 27, 2012		March 8, 2011  to October 29, 2011		January 30, 2011  to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Carrying value of long-term assets written down to fair value	$	160	$	395	$	—
Impairment charge	$	160	$	395	$	—

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Impact of Impairment of Certain Long-Lived Assets on Financial Condition and Results of Operations (Detail) (USD $) In Thousands, unless otherwise specified	8 Months Ended	9 Months Ended
	Oct. 29, 2011	Oct. 27, 2012
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment charge	$ 395	$ 160
Long-term assets written down to fair value
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment charge	$ 395	$ 160

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Long-Term Debt and Credit Agreements - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Oct. 11, 2012	Oct. 27, 2012	Mar. 07, 2011
ABL Facility
Debt Instrument [Line Items]
Unamortized deferred financing costs	$ 5.0
Letter Of Credit Facilities, maturity date	Oct. 11, 2017
Amortization period for deferred financing cost	5 years
Outstanding stand-by letters of credit		9.2
Letters of credit, remaining borrowing capacity		240.8
Line of credit facility borrowing capacity			250
Documentary Letters of Credit
Debt Instrument [Line Items]
Outstanding stand-by letters of credit		14.3
Letters of credit, remaining borrowing capacity		20.7
Line of credit facility borrowing capacity		$ 35

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Purchase Accounting

9 Months Ended

Oct. 27, 2012

Purchase Accounting

3. Purchase Accounting

The Acquisition was accounted for as a purchase business combination in accordance with ASC 805, Business Combinations, whereby the purchase price paid to effect the Acquisition was allocated to recognize the acquired assets and liabilities at fair value. The sources and uses of funds in connection with the Transactions are summarized below:

Sources:
Proceeds from Term Loan	$	1,200,000
Proceeds from Notes		400,000
Proceeds from equity contributions		1,225,911
Cash on hand		307,150
Total sources	$	3,133,061
Uses:
Equity purchase price	$	2,981,415
Transaction costs		151,646
Total uses	$	3,133,061

In connection with the purchase price allocation, fair values of long-lived and intangible assets were determined based upon assumptions related to the future cash flows, discount rates and asset lives utilizing currently available information, and in some cases, valuation results from independent valuation specialists. The purchase price was allocated as follows:

Purchase price	$	2,981,415
Less: net assets acquired		(571,644	)
Less: after-tax cost of post-combination share-based awards		(21,425	)
Excess of purchase price over book value of net assets acquired	$	2,388,346
Write up of tangible assets:
Property and equipment	$	35,334
Merchandise inventories		32,500
Fair market value of favorable leases		61,010
Acquisition-related intangible assets:
J.Crew brand name (indefinite lived)		885,300
Madewell brand name (20 year life)		82,000
Loyalty program and customer lists (5 year life)		27,010
Less: historical intangible assets		(4,351	)
Acquisition-related intangibles		989,959
Write down/(up) of liabilities:
Gift card liability revaluation		7,737
Deferred rent and lease incentive revaluation		66,880
Fair market value of unfavorable leases		(40,920	)
Deferred income taxes:
Long-term deferred tax asset		(20,171	)
Short-term deferred tax liability		(5,678	)
Long-term deferred tax liability		(425,220	)
Residual goodwill(1)		1,686,915
Total allocated excess purchase price	$	2,388,346

(1) Residual goodwill consists primarily of intangible assets related to the knowhow, design and merchandising of the Company’s brands that do not qualify for separate recognition in accordance with ASC 805.

Pro forma financial information

The following unaudited pro forma results of operations gives effect to the Transactions as if they had occurred on the first day of fiscal 2011 (January 30, 2011). The pro forma results of operations reflects adjustments (i) to record amortization and depreciation resulting from purchase accounting, (ii) to record Sponsor monitoring fees, and (iii) to eliminate non-recurring charges that were incurred in connection with the Transactions, including acquisition-related share-based compensation, transaction costs, transaction-related litigation costs and recoveries and amortization of the step-up in the carrying value of inventories. This unaudited pro forma financial information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the Transactions had actually occurred on that date, nor the results of operations in the future.

(Dollars in thousands)	For the Period January 30, 2011 to October 29, 2011
	As reported			Pro forma
Total revenues	$	1,324,046		$	1,324,046
Net income (loss)	$	(18,888	)	$	46,464

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Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	8 Months Ended	9 Months Ended	1 Months Ended
	Oct. 27, 2012	Oct. 29, 2011	Oct. 27, 2012	Mar. 07, 2011 Predecessor
Income Taxes [Line Items]
U.S. statutory income tax rate			35.00%
Effective tax rate		23.80%	37.50%	10.00%
Liabilities associated with uncertain tax positions including interest and penalties	$ 4.8		$ 4.8
Interest and penalties	1.1		1.1
Unrecognized tax benefits that would affect effective tax rate	2.4		2.4
Reduction in uncertain tax positions due to expiration of statute of limitations	$ 2.2

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Allocation of Purchase Price (Parenthetical) (Detail)	1 Months Ended
	Mar. 07, 2011
Madewell brand name
Business Acquisition [Line Items]
Intangible assets, life	20 years
Loyalty program and customer lists
Business Acquisition [Line Items]
Intangible assets, life	5 years

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Allocation of Purchase Price (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 07, 2011
Business Acquisition [Line Items]
Purchase price	$ 2,981,415
Less: net assets acquired	(571,644)
Less: after tax cost of post-combination share-based awards.	(21,425)
Excess purchase price	2,388,346
Write up of tangible assets:
Property and equipment	35,334
Merchandise inventories	32,500
Fair market value of favorable leases	61,010
Acquisition-related intangible assets:
J.Crew brand name (indefinite lived)	885,300
Less historical intangible assets	(4,351)
Acquisition-related intangibles	989,959
Write down/(up) of liabilities:
Fair market value of unfavorable leases	(40,920)
Deferred income taxes:
Long-term deferred tax asset	(20,171)
Short-term deferred tax liability	(5,678)
Long-term deferred tax liability	(425,220)
Residual goodwill	1,686,915	[1]
Excess purchase price	2,388,346
Madewell brand name
Acquisition-related intangible assets:
Intangible assets	82,000
Loyalty program and customer lists
Acquisition-related intangible assets:
Intangible assets	27,010
Gift card liability revaluation
Write down/(up) of liabilities:
Liability revaluation	7,737
Deferred rent and lease incentive revaluation
Write down/(up) of liabilities:
Liability revaluation	$ 66,880

[1] Residual goodwill consists primarily of intangible assets related to the knowhow, design and merchandising of the Company's brands that do not qualify for separate recognition in accordance with ASC 805.

XML

Subsequent Event - Additional Information (Detail) (Subsequent Event, Natural Disasters and Other Casualty Events)	1 Months Ended
	Oct. 29, 2012 Store
Subsequent Event | Natural Disasters and Other Casualty Events
Subsequent Event [Line Items]
Business loss description	Superstorm Sandy struck the East Coast on October 29, 2012, resulting in (i) personal property damage in three stores, one of which will remain closed indefinitely and (ii) temporary closures of 131 additional stores for periods of one to fourteen days.
Number of stores suffered personal property damages	3
Number of stores closed temporarily for periods of one to fifteen days	131
Number of stores closed indefinitely	1

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Unaudited Pro Forma Financial Information (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 29, 2011
Business Acquisition [Line Items]
Total revenues	$ 1,324,046
Net income (loss)	(18,888)
Total revenues, pro forma	1,324,046
Net income (loss), pro forma	$ 46,464

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Transactions with Sponsors - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	9 Months Ended
	Mar. 07, 2011	Oct. 27, 2012
Related Party Transaction [Line Items]
Aggregate transaction fee received by Sponsors	$ 35
Sponsor Fees, Description		In addition, pursuant to such agreement, and in exchange for on-going consulting and management advisory services, the Sponsors receive an aggregate annual monitoring fee prepaid quarterly equal to the greater of (i) 40 basis points of consolidated annual revenues or (ii) $8 million. The Sponsors also receive reimbursement for out-of-pocket expenses incurred in connection with services provided pursuant to the agreement.
Monitoring fees, included in selling, general and administrative expenses		$ 6.8

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The Transactions

9 Months Ended

Oct. 27, 2012

The Transactions

2. The Transactions

As discussed in note 1, the Acquisition was completed on March 7, 2011 and was financed with:

• Senior Credit Facilities of $1,450 million consisting of: (i) a $250 million, 5-year asset-based revolving credit facility (the “ABL Facility”), which was undrawn at closing, and (ii) a $1,200 million, 7-year term loan credit facility (the “Term Loan”);

• Senior unsecured 8.125% notes due 2019 (the “Notes”) of $400 million; and

• Equity investments of approximately $1.2 billion from Parent funded by the Sponsors, co-investors and management.

The Acquisition occurred simultaneously with:

• The closing of the financing transactions and equity investments described above; and

• The termination of the Company’s previous $200 million asset-based revolving credit facility.

These transactions, the Acquisition and payment of any costs related to these transactions are collectively herein referred to as the “Transactions.”

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Intangible Assets and Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	8 Months Ended	9 Months Ended	3 Months Ended
	Oct. 29, 2011	Oct. 27, 2012	Oct. 27, 2012 J.Crew Brand Name	Jul. 28, 2012 J.Crew Brand Name	Apr. 28, 2012 J.Crew Brand Name	Oct. 27, 2012 Goodwill	Jul. 28, 2012 Goodwill	Apr. 28, 2012 Goodwill	Oct. 27, 2012 Loyalty program and customer lists	Jul. 28, 2012 Loyalty program and customer lists	Apr. 28, 2012 Loyalty program and customer lists	Oct. 27, 2012 Favorable Lease Commitments	Jul. 28, 2012 Favorable Lease Commitments	Apr. 28, 2012 Favorable Lease Commitments	Oct. 27, 2012 Madewell Brand Name	Jul. 28, 2012 Madewell Brand Name	Apr. 28, 2012 Madewell Brand Name
Intangible Assets And Goodwill [Line Items]
Beginning Balance			$ 885,300	$ 885,300	$ 885,300	$ 1,686,915	$ 1,686,915	$ 1,686,915	$ 18,928	$ 20,354	$ 21,780	$ 42,095	$ 45,589	$ 48,930	$ 76,192	$ 77,217	$ 78,242
Amortization expense	(6,537)	(7,354)							(1,426)	(1,426)	(1,426)	(4,025)	(3,494)	(3,341)	(1,025)	(1,025)	(1,025)
Ending Balance			885,300	885,300	885,300	1,686,915	1,686,915	1,686,915	17,502	18,928	20,354	38,070	42,095	45,589	75,167	76,192	77,217
Total accumulated amortization									$ (9,508)			$ (22,940)			$ (6,833)

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Recorded Amounts included in Condensed Consolidated Balance Sheet (Detail) (USD $) In Thousands, unless otherwise specified	Oct. 27, 2012	Jan. 28, 2012
Derivatives, Fair Value [Line Items]
Interest rate caps (included in other assets)		$ 6
Interest rate swaps (included in other liabilities)	33,125	30,358
Accumulated other comprehensive loss, net of tax (included in stockholders' equity)	$ (20,655)	$ (18,963)

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Oct. 27, 2012	Jan. 28, 2012
Current assets:
Cash and cash equivalents	$ 195,675	$ 221,852
Merchandise inventories	348,601	242,659
Prepaid expenses and other current assets	61,646	58,023
Prepaid income taxes	7,012	4,087
Total current assets	612,934	526,621
Property and equipment, net	321,797	264,572
Favorable lease commitments, net	38,070	48,930
Deferred financing costs, net	52,178	58,729
Intangible assets, net	977,968	985,322
Goodwill	1,686,915	1,686,915
Other assets	1,784	2,433
Total assets	3,691,646	3,573,522
Current liabilities:
Accounts payable	161,523	158,116
Other current liabilities	154,680	116,339
Interest payable	12,983	26,735
Current portion of long-term debt	15,000	15,000
Total current liabilities	344,186	316,190
Long-term debt	1,570,000	1,579,000
Unfavorable lease commitments and deferred credits, net	65,840	53,700
Deferred income taxes, net	409,787	410,515
Other liabilities	37,896	37,065
Total liabilities	2,427,709	2,396,470
Stockholders' equity:
Common stock $0.01 par value; 1,000 shares authorized, issued and outstanding
Additional paid-in capital	1,186,301	1,183,606
Accumulated other comprehensive loss	(20,655)	(18,963)
Retained earnings	98,291	12,409
Total stockholders' equity	1,263,937	1,177,052
Total liabilities and stockholders' equity	$ 3,691,646	$ 3,573,522

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	8 Months Ended	9 Months Ended	1 Months Ended
	Oct. 29, 2011	Oct. 27, 2012	Mar. 07, 2011 Predecessor
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (2,738)	$ 85,882	$ (16,150)
Adjustments to reconcile to cash flows from operating activities:
Depreciation of property and equipment	41,795	52,363	3,929
Share-based compensation	47,015	3,213	1,080
Non-cash charge related to step-up in carrying value of inventory	30,833
Amortization of favorable lease commitments	8,739	10,860
Amortization of intangible assets	6,537	7,354
Amortization of deferred financing costs	6,401	7,201	970
Excess tax benefits from share-based awards			(74,495)
Changes in operating assets and liabilities:
Merchandise inventories	(55,435)	(105,942)	(20,204)
Prepaid expenses and other current assets	(17,332)	(3,623)	3,178
Other assets	921	649	(825)
Accounts payable and other liabilities	30,904	40,136	(2,440)
Federal and state income taxes	39,418	(4,514)	3,847
Net cash provided by (used in) operating activities	137,058	93,579	(101,110)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of J.Crew Group, Inc.	(2,981,415)
Capital expenditures	(69,351)	(109,588)	(2,644)
Net cash used in investing activities	(3,050,766)	(109,588)	(2,644)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt	1,600,000
Proceeds from equity contributions	1,173,741
Excess tax benefit from share-based awards			74,495
Payment of debt issuance costs	(67,530)
Proceeds from share-based compensation plans			1,130
Repayment of debt	(3,000)	(9,000)
Costs incurred in refinancing debt		(650)
Repurchases of common stock			(20)
Contribution to Parent		(518)
Net cash provided by (used in) financing activities	2,703,211	(10,168)	75,605
Decrease in cash and cash equivalents	(210,497)	(26,177)	(28,149)
Beginning balance	353,211	221,852	381,360
Ending balance	142,714	195,675	353,211
Supplemental cash flow information:
Income taxes paid	18,082	56,179
Interest paid	48,351	81,351	35
Non-cash equity contribution from management shareholders	$ 102,483

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Shares Available for Grant as Stock Options or Other Share-Based Awards (Detail)	9 Months Ended
	Oct. 27, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Available for grant beginning balance	26,572,908
Granted	(4,258,000)
Forfeited and available for reissuance	1,571,000
Available for grant ending balance	23,885,908

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Share-Based Compensation (Tables)

9 Months Ended

Oct. 27, 2012

Share-Based Compensation Recorded in Statements of Operations

A summary of share-based compensation recorded in the statements of operations and comprehensive income (loss) is as follows:

	For the Period January 29, 2012 to October 27, 2012		For the Period March 8, 2011 to October 29, 2011		For the Period January 30, 2011 to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Share-based compensation	$	3,213	$	47,015	$	1,080

Shares Available for Grant as Stock Options or Other Share-Based Awards

A summary of shares available for grant as stock options or other share-based awards is as follows:

	Shares
Available for grant at January 28, 2012		26,572,908
Granted		(4,258,000	)
Forfeited and available for reissuance		1,571,000
Available for grant at October 27, 2012		23,885,908

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Long-Term Debt (Detail) (USD $) In Thousands, unless otherwise specified	Oct. 27, 2012	Jan. 28, 2012
Debt Instrument [Line Items]
Less current portion of Term Loan	$ (15,000)	$ (15,000)
Long-term debt	1,570,000	1,579,000
Term Loan
Debt Instrument [Line Items]
Long-term debt	1,185,000	1,194,000
Senior Unsecured Notes
Debt Instrument [Line Items]
Long-term debt	$ 400,000	$ 400,000

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Derivative Financial Instruments (Tables)

9 Months Ended

Oct. 27, 2012

Recorded Amounts included in Condensed Consolidated Balance Sheet

A summary of the recorded amounts included in the condensed consolidated balance sheet is as follows:

	October 27, 2012			January 28, 2012
Interest rate caps (included in other assets)	$	—		$	6
Interest rate swaps (included in other liabilities)	$	33,125		$	30,358
Accumulated other comprehensive loss, net of tax (included in stockholders’ equity)	$	(20,655	)	$	(18,963	)

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Basis of Presentation

9 Months Ended

Oct. 27, 2012

Basis of Presentation

1. Basis of Presentation

J.Crew Group, Inc. and its wholly owned subsidiaries (the “Company” or “Group”) was acquired (the “Acquisition”) on March 7, 2011 through a merger with a subsidiary of Chinos Holdings, Inc. (the “Parent”). The Parent was formed by investment funds affiliated with TPG Capital, L.P. (“TPG”) and Leonard Green & Partners, L.P. (“LGP” and together with TPG, the “Sponsors”). Subsequent to the Acquisition, Group became an indirect, wholly owned subsidiary of Parent, which is owned by affiliates of the Sponsors, co-investors and members of management. Prior to March 7, 2011, the Company operated as a public company with its common stock traded on the New York Stock Exchange.

Although the Company continued as the same legal entity after the Acquisition, the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows are presented for two periods: Predecessor and Successor, which relate to the period before and after the Acquisition. The Acquisition and the allocation of the purchase price were recorded as of March 7, 2011.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2012.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly in all material respects the Company’s financial position, results of operations and cash flows for the applicable interim periods. Certain prior year amounts have been reclassified to conform to current period presentation. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year as a whole.

Management is required to make estimates and assumptions about future events in preparing financial statements in conformity with generally accepted accounting principles. These estimates and assumptions affect the amounts of assets, liabilities, revenues and expenses and the disclosure of loss contingencies at the date of the unaudited condensed consolidated financial statements. While management believes that past estimates and assumptions have been materially accurate, current estimates are subject to change if different assumptions as to the outcome of future events are made. Management evaluates estimates and judgments on an ongoing basis and predicates those estimates and judgments on historical experience and on reasonable factors. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying unaudited condensed consolidated financial statements.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Oct. 27, 2012	Jan. 28, 2012
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	1,000	1,000
Common stock, shares outstanding	1,000	1,000

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Legal Proceedings

9 Months Ended

Oct. 27, 2012

Legal Proceedings

11. Legal Proceedings

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these legal proceedings, either individually or in the aggregate, would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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Document and Entity Information	9 Months Ended
	Oct. 27, 2012	Nov. 23, 2012
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 27, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Entity Registrant Name	J CREW GROUP INC
Entity Central Index Key	0001051251
Current Fiscal Year End Date	--02-02
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1,000

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Recent Accounting Pronouncements

9 Months Ended

Oct. 27, 2012

Recent Accounting Pronouncements

12. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In May 2011, a pronouncement was issued providing consistent definitions and disclosure requirements of fair value with respect to U.S. GAAP and International Financial Reporting Standards. The pronouncement changed certain fair value measurement principles and enhanced the disclosure requirements, particularly for Level 3 measurements. The changes were effective prospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this pronouncement on January 29, 2012. The adoption of this guidance did not have a significant impact on the Company’s condensed consolidated financial statements.

In June 2011, a pronouncement was issued that amended the guidance relating to the presentation of comprehensive income and its components. The pronouncement eliminates the option to present the components of other comprehensive income as part of the statement of equity and requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company adopted this pronouncement on January 29, 2012. The adoption of this guidance required changes in presentation only and therefore did not have a significant impact on the Company’s condensed consolidated financial statements.

In September 2011, a pronouncement was issued that amended the guidance for goodwill impairment testing. The pronouncement allows the entity to perform an initial qualitative assessment to determine whether it is “more likely than not” that the fair value of the reporting unit is less than its carrying amount. This assessment is used as a basis for determining whether it is necessary to perform the two step goodwill impairment test. The methodology for how goodwill is calculated, assigned to reporting units, and the application of the two step goodwill impairment test have not been revised. The pronouncement is effective for fiscal years beginning after December 15, 2011. The Company adopted this pronouncement in the fourth quarter of fiscal 2011. The adoption did not have a significant impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2011, a pronouncement was issued that amended the guidance related to the disclosure of recognized financial instruments and derivative instruments that are either offset on the balance sheet or subject to an enforceable master netting arrangement or similar agreement. The amended provisions are effective for fiscal years beginning on or after January 1, 2013, and are required to be applied retrospectively for all prior periods presented. As this pronouncement relates to disclosure only, the adoption of this amendment will not have a significant impact on the Company’s condensed consolidated financial statements.

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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		8 Months Ended	9 Months Ended	1 Months Ended
	Oct. 27, 2012	Oct. 29, 2011	Oct. 29, 2011	Oct. 27, 2012	Mar. 07, 2011 Predecessor
Revenues:
Net sales	$ 548,506	$ 473,027	$ 1,171,450	$ 1,563,936	$ 130,116
Other	7,302	6,548	19,358	20,882	3,122
Total revenues	555,808	479,575	1,190,808	1,584,818	133,238
Cost of goods sold, including buying and occupancy costs	292,738	277,806	712,066	845,223	70,284
Gross profit	263,070	201,769	478,742	739,595	62,954
Selling, general and administrative expenses	188,569	143,876	415,748	527,357	79,736
Income (loss) from operations	74,501	57,893	62,994	212,238	(16,782)
Interest expense, net of interest income	24,089	25,349	66,588	74,860	1,166
Income (loss) before income taxes	50,412	32,544	(3,594)	137,378	(17,948)
Provision (benefit) for income taxes	17,233	10,944	(856)	51,496	(1,798)
Net income (loss)	33,179	21,600	(2,738)	85,882	(16,150)
Other comprehensive income (loss):
Unrealized loss on cash flow hedge, net of tax	(436)	(3,581)	(15,231)	(1,692)
Comprehensive income (loss)	$ 32,743	$ 18,019	$ (17,969)	$ 84,190	$ (16,150)

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Share-Based Compensation

9 Months Ended

Oct. 27, 2012

Share-Based Compensation

6. Share-Based Compensation

Chinos Holdings, Inc. 2011 Equity Incentive Plan

During the first nine months of fiscal 2012, the Parent issued 4,218,000 options to certain members of management, including (i) 1,524,000 options with an exercise price of $1.00 that become exercisable over a period of up to seven years and (ii) 2,694,000 options with an exercise price of $1.00 that only become exercisable when certain owners of the Parent receive a specified level of cash proceeds, as defined in the equity incentive plan, from the sale of their initial investment. The options have terms of up to ten years.

The weighted average grant-date fair value of the time-based awards was $0.47 per share. For the first nine months of fiscal 2012, the Company recorded an expense of $3.2 million for the time-based awards. Expense associated with the options exercisable when certain owners of the Parent receive a specified level of cash proceeds will not be recognized until that event occurs.

During the first nine months of fiscal 2012, the Parent issued 40,000 shares of restricted stock to a new member of the board of directors. The shares vest over two years and have a weighted average grant-date fair value of $2.17.

A summary of share-based compensation recorded in the statements of operations and comprehensive income (loss) is as follows:

	For the Period January 29, 2012 to October 27, 2012		For the Period March 8, 2011 to October 29, 2011		For the Period January 30, 2011 to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Share-based compensation	$	3,213	$	47,015	$	1,080

A summary of shares available for grant as stock options or other share-based awards is as follows:

	Shares
Available for grant at January 28, 2012		26,572,908
Granted		(4,258,000	)
Forfeited and available for reissuance		1,571,000
Available for grant at October 27, 2012		23,885,908

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Goodwill and Intangible Assets

9 Months Ended

Oct. 27, 2012

Goodwill and Intangible Assets

5. Goodwill and Intangible Assets

The significant components of our intangible assets and goodwill are as follows:

	Loyalty Program and Customer Lists			Favorable Lease Commitments			Madewell Brand Name			J.Crew Brand Name		Goodwill
Balance at January 28, 2012	$	21,780		$	48,930		$	78,242		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(3,341	)		(1,025	)		—		—
Balance at April 28, 2012	$	20,354		$	45,589		$	77,217		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(3,494	)		(1,025	)		—		—
Balance at July 28, 2012	$	18,928		$	42,095		$	76,192		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(4,025	)		(1,025	)		—		—
Balance at October 27, 2012	$	17,502		$	38,070		$	75,167		$	885,300	$	1,686,915
Total accumulated amortization at October 27, 2012	$	(9,508	)	$	(22,940	)	$	(6,833	)

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Long-Term Debt and Credit Agreements (Tables)

9 Months Ended

Oct. 27, 2012

Long-Term Debt

Long-term debt consisted of the following:

	October 27, 2012			January 28, 2012
Term Loan	$	1,185,000		$	1,194,000
Notes		400,000			400,000
ABL Facility		—			—
Less current portion of Term Loan		(15,000	)		(15,000	)
Long-term debt	$	1,570,000		$	1,579,000

Interest Expense

The significant components of interest expense are as follows:

	For the Thirty-nine Weeks Ended		For the Period
	January 29, 2012 to October 27, 2012		March 8, 2011 to October 29, 2011		January 30, 2011 to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Term Loan	$	42,796	$	37,488	$	—
Notes		24,375		21,458		—
Amortization of deferred financing costs		7,201		6,401		970
Other, net of interest income		488		1,241		196
Interest expense, net	$	74,860	$	66,588	$	1,166

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Subsequent Event

9 Months Ended

Oct. 27, 2012

Subsequent Event

13. Subsequent Event

Superstorm Sandy struck the East Coast on October 29, 2012, resulting in (i) personal property damage in three stores, one of which will remain closed indefinitely and (ii) temporary closures of 131 additional stores for periods of one to fourteen days.

Forward-Looking Statements

This report contains “forward-looking statements,” which include information concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs and other information that is not historical information, including statements regarding our estimated impact on revenues as a result of Superstorm Sandy. When used in this report, the words “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, our examination of operating trends, are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and beliefs, but there can be no assurance that we will realize our expectations or that our beliefs will prove correct.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Important factors that could cause our actual results to differ include, but are not limited to, our substantial indebtedness and lease obligations, the strength of the global economy, declines in consumer spending or changes in seasonal consumer spending patterns, competitive market conditions, our ability to anticipate and timely respond to changes in trends and consumer preferences, our ability to successfully develop, launch and grow our newer concepts and execute on strategic initiatives, products offerings, sales channels and businesses, material disruption to our information systems, our ability to implement our real estate strategy, our ability to attract and retain key personnel, interruptions in our foreign sourcing operations, and other factors which are set forth in the section entitled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 28, 2012 filed with the SEC. There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date they are made and are expressly qualified in their entirety by the cautionary statements included in this report. Except as may be required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances occurring after the date they were made or to reflect the occurrence of unanticipated events.

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Fair Value Measurements

9 Months Ended

Oct. 27, 2012

Fair Value Measurements

9. Fair Value Measurements

The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Observable inputs, other than quoted prices included in Level 1, such as quoted prices for markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Financial assets and liabilities

The fair value of the Company’s debt is estimated to be $1,608 million and $1,542 million at October 27, 2012 and January 28, 2012 based on quoted market prices of the debt (level 1 inputs).

In April 2011, the Company entered into interest rate cap and swap agreements in order to hedge the variability of cash flows related to a portion of the Company’s floating rate indebtedness, which are measured in the financial statements at fair value on a recurring basis. See note 8 for more information regarding the fair value of these financial assets and liabilities.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts payable and other current liabilities approximate fair value because of their short-term nature.

Non-financial assets and liabilities

Except for certain leasehold improvements, the Company does not have any non-financial assets or liabilities as of October 27, 2012 or January 28, 2012 that are measured in the financial statements at fair value.

The Company performs impairment tests of certain long-lived assets whenever there are indicators of impairment. These tests typically contemplate assets at a store level (e.g. leasehold improvements). The Company recognizes an impairment loss when the carrying value of a long-lived asset is not recoverable in light of the undiscounted future cash flows and measures an impairment loss as the difference between the carrying amount and fair value of the asset based on discounted future cash flows. The Company has determined that the future cash flow approach (level 3 inputs) provides the most relevant and reliable means by which to determine fair value in this circumstance.

A summary of the impact of the impairment of certain long-lived assets on financial condition and results of operations is as follows:

	For the Thirty-nine Weeks Ended		For the Period
	January 29, 2012  to October 27, 2012		March 8, 2011  to October 29, 2011		January 30, 2011  to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Carrying value of long-term assets written down to fair value	$	160	$	395	$	—
Impairment charge	$	160	$	395	$	—

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Long-Term Debt and Credit Agreements

9 Months Ended

Oct. 27, 2012

Long-Term Debt and Credit Agreements

7. Long-Term Debt and Credit Agreements

Long-term debt consisted of the following:

	October 27, 2012			January 28, 2012
Term Loan	$	1,185,000		$	1,194,000
Notes		400,000			400,000
ABL Facility		—			—
Less current portion of Term Loan		(15,000	)		(15,000	)
Long-term debt	$	1,570,000		$	1,579,000

On October 11, 2012, the Company entered into an amendment to the ABL Facility (the “First Amendment”) that extended the scheduled maturity date to October 11, 2017. The First Amendment reduces the pricing on loans, letters of credit and fees paid on the unutilized commitments. The First Amendment also modifies certain conditions regarding financial and negative covenants. Unamortized deferred financing costs of $5.0 million at the effective date of the First Amendment will be amortized over the new five-year term.

There were no short-term borrowings under the ABL Facility during the first nine months of fiscal 2012. Outstanding standby letters of credit were $9.2 million and excess availability, as defined, was $240.8 million at October 27, 2012. Additionally, the Company has an unsecured, demand letter of credit facility with HSBC which provides for the issuance of up to $35 million of documentary letters of credit on a no fee basis. Outstanding letters of credit under this facility were $14.3 million and availability was $20.7 million at October 27, 2012.

The significant components of interest expense are as follows:

	For the Thirty-nine Weeks Ended		For the Period
	January 29, 2012 to October 27, 2012		March 8, 2011 to October 29, 2011		January 30, 2011 to March 7, 2011
	(Successor)		(Successor)		(Predecessor)
Term Loan	$	42,796	$	37,488	$	—
Notes		24,375		21,458		—
Amortization of deferred financing costs		7,201		6,401		970
Other, net of interest income		488		1,241		196
Interest expense, net	$	74,860	$	66,588	$	1,166

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Derivative Financial Instruments

9 Months Ended

Oct. 27, 2012

Derivative Financial Instruments

8. Derivative Financial Instruments

Interest Rate Caps

In April 2011, the Company entered into interest rate cap agreements for an aggregate notional amount of $600 million in order to hedge the variability of cash flows related to a portion of the Company’s floating rate indebtedness. These cap agreements, effective in March 2012, hedge a portion of contractual floating rate interest commitments through the expiration of the agreements in March 2013. Pursuant to the agreements, the Company has capped LIBOR at 3.5% with respect to the aggregate notional amount of $600 million. In the event LIBOR exceeds 3.5% the Company will pay interest at the capped rate. In the event LIBOR is less than 3.5%, the Company will pay interest at the prevailing LIBOR. In the first nine months of fiscal 2012 the Company paid interest under the Term Loan at the prevailing LIBOR.

Interest Rate Swaps

In April 2011, the Company entered into floating-to-fixed interest rate swap agreements for an initial aggregate notional amount of $600 million to limit exposure to interest rate increases related to a portion of the Company’s floating rate indebtedness once the Company’s interest rate cap agreements expire. These swap agreements, effective March 2013, hedge a portion of contractual floating rate interest commitments through the expiration of the agreements in March 2016. As a result of the agreements, the Company’s effective fixed interest rate on the notional amount of floating rate indebtedness will be 3.56% plus the then applicable margin.

Fair Value

As of the effective date, the Company designated the interest rate cap and interest rate swap agreements as cash flow hedges. As cash flow hedges, unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The interest rate cap and interest rate swap agreements are highly correlated to the changes in interest rates to which the Company is exposed. Unrealized gains and losses on these instruments are designated as effective or ineffective. The effective portion of such gains or losses is recorded as a component of accumulated other comprehensive income or loss, while the ineffective portion of such gains or losses will be recorded as a component of interest expense. Future realized gains and losses in connection with each required interest payment will be reclassified from accumulated other comprehensive income or loss to interest expense.

The fair values of the interest rate cap and swap agreements are estimated using industry standard valuation models using market-based observable inputs, including interest rate curves (level 2 inputs). A summary of the recorded amounts included in the condensed consolidated balance sheet is as follows:

	October 27, 2012			January 28, 2012
Interest rate caps (included in other assets)	$	—		$	6
Interest rate swaps (included in other liabilities)	$	33,125		$	30,358
Accumulated other comprehensive loss, net of tax (included in stockholders’ equity)	$	(20,655	)	$	(18,963	)

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Income Taxes

9 Months Ended

Oct. 27, 2012

Income Taxes

10. Income Taxes

Group files a consolidated federal income tax return, which includes all of its wholly owned subsidiaries. Each subsidiary files separate, or combined where required, state or local tax returns in required jurisdictions. Effective for the tax year ended January 2012, the Company filed as a member of the consolidated group of Parent.

Tax returns for periods ended January 2010 through January 2012 are subject to examination by the Internal Revenue Service. The tax returns for the periods ended January 2011 and March 7, 2011 are currently under examination. Various state and local jurisdiction tax authorities are in the process of examining income tax returns or hearing appeals for certain tax years ranging from 2008 to 2010. The results of these audits and appeals are not expected to have a significant effect on the results of operations or financial position.

The difference between the U.S. statutory income tax rate of 35% and the effective tax rate for the thirty-nine weeks ended October 27, 2012 (Successor) of 37.5% is driven by state and local income taxes, partially offset by a reduction in uncertain tax positions. The difference between the U.S. statutory income tax rate of 35% and the effective tax rate the period March 8, 2011 to October 29, 2011 (Successor) and January 30, 2011 to March 7, 2011 (Predecessor) of 23.8% and 10.0%, respectively, is primarily driven by (i) the tax deductibility of certain Transaction costs and (ii) state and local income taxes, net of federal benefit.

As of October 27, 2012, the Company has $4.8 million in liabilities associated with uncertain tax positions (including interest and penalties of $1.1 million) reflected in other liabilities. The amount, if recognized, that would affect the effective tax rate is $2.4 million. During the third quarter of fiscal 2012, the Company reduced its liability for uncertain tax positions by $2.2 million due to the expiration of statute of limitations. While the Company expects the amount of unrecognized tax benefits to change in the next twelve months, the change is not expected to have a significant effect on the estimated effective annual tax rate, the results of operations or financial position. However, the outcome of tax matters is uncertain and unforeseen results can occur.

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Share-Based Compensation Recorded in Statements of Operations (Detail) (USD $) In Thousands, unless otherwise specified	8 Months Ended	9 Months Ended	1 Months Ended
	Oct. 29, 2011	Oct. 27, 2012	Mar. 07, 2011 Predecessor
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 47,015	$ 3,213	$ 1,080

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Oct. 27, 2012

Intangible Assets and Goodwill

The significant components of our intangible assets and goodwill are as follows:

	Loyalty Program and Customer Lists			Favorable Lease Commitments			Madewell Brand Name			J.Crew Brand Name		Goodwill
Balance at January 28, 2012	$	21,780		$	48,930		$	78,242		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(3,341	)		(1,025	)		—		—
Balance at April 28, 2012	$	20,354		$	45,589		$	77,217		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(3,494	)		(1,025	)		—		—
Balance at July 28, 2012	$	18,928		$	42,095		$	76,192		$	885,300	$	1,686,915
Amortization expense		(1,426	)		(4,025	)		(1,025	)		—		—
Balance at October 27, 2012	$	17,502		$	38,070		$	75,167		$	885,300	$	1,686,915
Total accumulated amortization at October 27, 2012	$	(9,508	)	$	(22,940	)	$	(6,833	)

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Transactions - Additional Information (Detail) (USD $)	1 Months Ended	8 Months Ended
	Mar. 07, 2011	Oct. 29, 2011
Debt Instrument [Line Items]
Proceeds from long-term debt		$ 1,600,000,000
Proceed from equity investments from parent funded by sponsors	1,225,911,000
Line of credit facility, borrowing capacity terminated	200,000,000
Senior Unsecured Notes
Debt Instrument [Line Items]
Proceeds from long-term debt	400,000,000
Debt, interest rate	8.125%
Debt, maturity year	2019
ABL Facility
Debt Instrument [Line Items]
Line of credit facility, borrowing capacity	250,000,000
Debt, maturity period	5 years
Term Loan
Debt Instrument [Line Items]
Debt, maturity period	7 years
Proceeds from long-term debt	1,200,000,000
Senior Credit Facilities
Debt Instrument [Line Items]
Line of credit facility, borrowing capacity	$ 1,450,000,000

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Fair Value Measurements - Additional information (Detail) (Fair Value, Inputs, Level 1, USD $) In Millions, unless otherwise specified	Oct. 27, 2012	Jan. 28, 2012
Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	$ 1,608	$ 1,542

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Condensed Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands, except Share data	Total USD ($)	Common Stock	Additional paid-in capital USD ($)	Retained earnings USD ($)	Accumulated other comprehensive loss USD ($)
Beginning Balance at Mar. 07, 2011
Issuance of 1,000 shares of common stock (in shares)		1,000
Issuance of 1,000 shares of common stock	$ 1,170,693		$ 1,170,693
Share-based compensation	12,913		12,913
Net income	12,409			12,409
Unrealized loss on cash flow hedges, net of tax	(18,963)				(18,963)
Ending Balance at Jan. 28, 2012	1,177,052		1,183,606	12,409	(18,963)
Ending Balance (in shares) at Jan. 28, 2012		1,000
Share-based compensation	3,213		3,213
Contribution to Parent	(518)		(518)
Net income	85,882			85,882
Unrealized loss on cash flow hedges, net of tax	(1,692)				(1,692)
Ending Balance at Oct. 27, 2012	$ 1,263,937		$ 1,186,301	$ 98,291	$ (20,655)
Ending Balance (in shares) at Oct. 27, 2012		1,000

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Transactions with Sponsors

9 Months Ended

Oct. 27, 2012

Transactions with Sponsors

4. Transactions with Sponsors

In connection with the Transactions, the Company entered into a management services agreement with the Sponsors pursuant to which they received on the closing date an aggregate transaction fee of $35 million. In addition, pursuant to such agreement, and in exchange for on-going consulting and management advisory services, the Sponsors receive an aggregate annual monitoring fee prepaid quarterly equal to the greater of (i) 40 basis points of consolidated annual revenues or (ii) $8 million. The Sponsors also receive reimbursement for out-of-pocket expenses incurred in connection with services provided pursuant to the agreement. The Company recorded an expense of $6.8 million, in the first nine months of fiscal 2012, for monitoring fees and out-of-pocket expenses, included in selling, general and administrative expenses in the statements of operations and comprehensive income (loss).

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Sources and Uses of Funds in Connection with Transactions (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended	8 Months Ended
	Mar. 07, 2011	Oct. 29, 2011
Business Acquisition [Line Items]
Proceeds from long-term debt		$ 1,600,000
Proceed from equity contributions	1,225,911
Cash on hand	307,150
Total sources	3,133,061
Equity purchase price	2,981,415
Transaction costs	151,646
Total uses	3,133,061
Term Loan
Business Acquisition [Line Items]
Proceeds from long-term debt	1,200,000
Senior Unsecured Notes
Business Acquisition [Line Items]
Proceeds from long-term debt	$ 400,000

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Interest Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		8 Months Ended	9 Months Ended	8 Months Ended	9 Months Ended	8 Months Ended	9 Months Ended	8 Months Ended	9 Months Ended	8 Months Ended	9 Months Ended	1 Months Ended
	Oct. 27, 2012	Oct. 29, 2011	Oct. 29, 2011	Oct. 27, 2012	Oct. 29, 2011 Amortization of deferred financing costs	Oct. 27, 2012 Amortization of deferred financing costs	Oct. 29, 2011 Other, net of interest income	Oct. 27, 2012 Other, net of interest income	Oct. 29, 2011 Term Loan	Oct. 27, 2012 Term Loan	Oct. 29, 2011 Senior Unsecured Notes	Oct. 27, 2012 Senior Unsecured Notes	Mar. 07, 2011 Predecessor	Mar. 07, 2011 Predecessor Amortization of deferred financing costs	Mar. 07, 2011 Predecessor Other, net of interest income
Debt Instrument [Line Items]
Interest expense, net	$ 24,089	$ 25,349	$ 66,588	$ 74,860	$ 6,401	$ 7,201	$ 1,241	$ 488	$ 37,488	$ 42,796	$ 21,458	$ 24,375	$ 1,166	$ 970	$ 196

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Purchase Accounting (Tables)

9 Months Ended

Oct. 27, 2012

Sources and Uses of Funds in Connection with Transactions

The sources and uses of funds in connection with the Transactions are summarized below:

Sources:
Proceeds from Term Loan	$	1,200,000
Proceeds from Notes		400,000
Proceeds from equity contributions		1,225,911
Cash on hand		307,150
Total sources	$	3,133,061
Uses:
Equity purchase price	$	2,981,415
Transaction costs		151,646
Total uses	$	3,133,061

Allocation of Purchase Price

The purchase price was allocated as follows:

Purchase price	$	2,981,415
Less: net assets acquired		(571,644	)
Less: after-tax cost of post-combination share-based awards		(21,425	)
Excess of purchase price over book value of net assets acquired	$	2,388,346
Write up of tangible assets:
Property and equipment	$	35,334
Merchandise inventories		32,500
Fair market value of favorable leases		61,010
Acquisition-related intangible assets:
J.Crew brand name (indefinite lived)		885,300
Madewell brand name (20 year life)		82,000
Loyalty program and customer lists (5 year life)		27,010
Less: historical intangible assets		(4,351	)
Acquisition-related intangibles		989,959
Write down/(up) of liabilities:
Gift card liability revaluation		7,737
Deferred rent and lease incentive revaluation		66,880
Fair market value of unfavorable leases		(40,920	)
Deferred income taxes:
Long-term deferred tax asset		(20,171	)
Short-term deferred tax liability		(5,678	)
Long-term deferred tax liability		(425,220	)
Residual goodwill(1)		1,686,915
Total allocated excess purchase price	$	2,388,346

(1) Residual goodwill consists primarily of intangible assets related to the knowhow, design and merchandising of the Company’s brands that do not qualify for separate recognition in accordance with ASC 805.

Unaudited Pro Forma Financial Information

The following unaudited pro forma results of operations gives effect to the Transactions as if they had occurred on the first day of fiscal 2011 (January 30, 2011). The pro forma results of operations reflects adjustments (i) to record amortization and depreciation resulting from purchase accounting, (ii) to record Sponsor monitoring fees, and (iii) to eliminate non-recurring charges that were incurred in connection with the Transactions, including acquisition-related share-based compensation, transaction costs, transaction-related litigation costs and recoveries and amortization of the step-up in the carrying value of inventories. This unaudited pro forma financial information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the Transactions had actually occurred on that date, nor the results of operations in the future.

(Dollars in thousands)	For the Period January 30, 2011 to October 29, 2011
	As reported			Pro forma
Total revenues	$	1,324,046		$	1,324,046
Net income (loss)	$	(18,888	)	$	46,464