UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant  x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

¨ Preliminary Proxy Statement

¨ Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2))

¨ Definitive Proxy Statement

x Definitive Additional Materials

¨ Soliciting Material Under Rule 14a-12

J.CREW GROUP, INC.

(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box):

x No fee required

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

¨ Fee paid previously with preliminary materials.

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing party:

(4) Date Filed:

Forward-Looking Statements:

Certain statements herein are forward-looking statements. Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending or preferences in apparel, our ability to compete with other retailers, the parties’ ability to consummate the proposed transaction on the contemplated timeline, the performance of the Company’s products within the prevailing retail environment, our strategy and expansion plans, systems upgrades, reliance on key personnel, trade restrictions, political or financial instability in countries where the Company’s goods are manufactured, postal rate increases, paper and printing costs, availability of suitable store locations at appropriate terms and other factors which are set forth in the Company’s Form 10-K and in all filings with the Securities and Exchange Commission made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information and Where to Find It:

In connection with the proposed transaction, the Company has filed with the Securities and Exchange Commission and mailed to its security holders a definitive proxy statement. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY ALL RELEVANT MATERIALS FILED OR FURNISHED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE DEFINITIVE PROXY STATEMENT, BECAUSE THESE MATERIALS CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of the definitive proxy statement and other documents filed or furnished to the Securities and Exchange Commission by the Company at the Securities and Exchange Commission’s website at http://www.sec.gov or at the Company’s website at http://www.jcrew.com and then clicking on the “Investor Relations” link and then the “SEC Filings” link. The definitive proxy statement and other relevant materials may also be obtained for free from J.Crew Group, Inc. by directing such request to J.Crew Group, Inc., 770 Broadway, New York, New York 10003; or (212) 209-2500. The contents of the websites referenced above are not deemed to be incorporated by reference into the definitive proxy statement.

Participants in Solicitation:

The Company and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from its stockholders in connection with the proposed transaction. Information concerning the interests of the Company’s participants in the solicitation is set forth in J.Crew Group, Inc.’s proxy

1

statements and Annual Reports on Form 10-K, previously filed with the Securities and Exchange Commission, and in the definitive proxy statement relating to the proposed transaction. Each of these documents is available free of charge at the Securities and Exchange Commission’s website at www.sec.gov and from the Company at http://www.jcrew.com, and then clicking on the “Investor Relations” link and then the “SEC Filings” link or by directing such request to J.Crew Group, Inc., 770 Broadway, New York, New York 10003; or (212) 209-2500.

2

INVESTOR PRESENTATION

February 2011

2

Forward-Looking Statements: 

Certain statements herein are forward-looking statements. Such forward-looking statements reflect the Company’s current expectations or beliefs

concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking

statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending or

preferences in apparel, our ability to compete with other retailers, the parties’ ability to consummate the proposed transaction on the contemplated

timeline, the performance of the Company’s products within the prevailing retail environment, our strategy and expansion plans, systems upgrades,

reliance on key personnel, trade restrictions, political or financial instability in countries where the Company’s goods are manufactured, postal rate

increases, paper and printing costs, availability of suitable store locations at appropriate terms and other factors which are set forth in the Company’s For

10-K and in all filings with the Securities and Exchange Commission made by the Company subsequent to the filing of the Form 10-K. The Company does

not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. 

Additional Information and Where to Find It: 

In connection with the proposed transaction, the Company has filed with the Securities and Exchange Commission and mailed to its security holders a

definitive proxy statement. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ CAREFULLY AND IN THEIR

ENTIRETY ALL RELEVANT MATERIALS FILED OR FURNISHED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE

DEFINITIVE PROXY STATEMENT, BECAUSE THESE MATERIALS CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED

TRANSACTION. Investors and security holders may obtain a free copy of the definitive proxy statement and other documents filed or furnished to the

Securities and Exchange Commission by the Company at the Securities and Exchange Commission’s website at http://www.sec.gov or at the Company’s

website at http://www.jcrew.com and then clicking on the “Investor Relations” link and then the “SEC Filings” link. The definitive proxy statement and other

relevant materials may also be obtained for free from J.Crew Group, Inc. by directing such request to J.Crew Group, Inc., 770 Broadway, New York, New

York 10003; or (212) 209-2500. The contents of the websites referenced above are not deemed to be incorporated by reference into the definitive proxy

statement. 

Participants in Solicitation: 

The Company and its directors, executive officers and other members of its management and employees may be deemed to be participants in the

solicitation of proxies from its stockholders in connection with the proposed transaction. Information concerning the interests of the Company’s participants

in the solicitation is set forth in J.Crew Group, Inc.’s proxy statements and Annual Reports on Form 10-K, previously filed with the Securities and Exchange

Commission, and in the definitive proxy statement relating to the proposed transaction. Each of these documents is available free of charge at the

Securities and Exchange Commission’s website at www.sec.gov and from the Company at http://www.jcrew.com, and then clicking on the “Investor

Relations” link and then the “SEC Filings” link or by directing such request to J.Crew Group, Inc., 770 Broadway, New York, New York 10003; or

(212) 209-2500.

3

AGENDA

Business Overview

Transaction Summary

Compelling Offer

Special Committee Process

Key Special Committee Actions

Sale and Other Alternatives

Recommendation of the Special Committee

Meaningful

Post-Signing

“Go-Shop”

Process

Calendar of Certain Events

Market Reaction

Business Results, Outlook and Valuation Analysis

Conclusion

4

J.CREW STORES

FACTORY STORES

DIRECT

MADEWELL STORES

Note:

Other

2%

of

revenue

consists

primarily

of

shipping

and

handling;

store

count

as

of

1/18/2011

•

220 J.Crew

stores

•

9 crewcuts

stores

•

Collection

•

Wedding

•

Men’s

•

20 Madewell

stores

•

85 factory outlet

stores, including

crewcuts

factory stores

•

www.jcrew.com

•

J.Crew

catalogs

•

www.jcrew.com/ kids-

clothing.jsp

•

crewcuts

catalogs

•

www.madewell.com

•

www.jcrew.com/

factory

Retail stores:

70% of revenue

Direct:

28% of revenue

2010E Revenue: $1.7 billion

J.CREW GROUP, INC.

BUSINESS OVERVIEW

5

TRANSACTION SUMMARY

On

November

23,

2010,

J.Crew

Group,

Inc.

(“J.Crew”

or

the

“Company”)

entered

into

a

merger

agreement

with affiliates of TPG Capital (“TPG”) and Leonard Green Partners (“LGP”)

J.Crew

is being purchased by TPG and LGP for a price of $43.50 per share or approximately $3.0 billion

Transaction will be funded using (i) equity contributions from TPG/LGP totaling approximately $1.2 billion, (ii)

rollover financing totaling approximately $100 million, (iii) debt financing of approximately $1.6 billion and (iv)

cash of the company totaling approximately $312 million

6

$43.50 PER SHARE IN CASH: A COMPELLING OFFER

Attractive premium

–

29.6% to prior month’s average stock price

–

19.2% to stock price prior to announcement

–

Deal announced simultaneously with revision of Q4 guidance to $0.30-$0.35 versus consensus estimate of

$0.50; Company reaffirmed guidance on January 20, 2011

Attractive multiple

–

9.6x 2010E EBITDA based on the November 5 year projections

–

8.6x

LTM

EBITDA

(11/1/2009

to

10/30/2010)

–

higher

than

the

median

of

relevant

transactions

and higher

than the recent specialty apparel transactions

–

21.0x 2010E P/E multiple based on the November 5 year projections

Within range of fairness based on various valuation methodologies

–

Trading comparables

–

Precedent transactions

–

Discounted cash flow

Source:

J.Crew

Definitive

Proxy

statement,

filed

with

the

SEC

on

1/25/2011

–

Opinion

of

Perella

Weinberg,

Financial

Advisor

to

the

Special

Committee

Notes:

Premium of 19.2% based on closing price on 11/19 reference date of $36.49; closing price on 11/22 was $37.65

7

SPECIAL COMMITTEE PROCESS

Board of Directors resolved that it would not approve a sale of the Company without Special Committee

recommendation

Special Committee of four independent directors empowered to consider and recommend that the Board take

action with respect to strategic alternatives, including a sale of the Company

Assisted by experienced independent advisors

–

Legal

advisor

to

Special

Committee

–

Cravath,

Swaine

&

Moore

LLP

–

Financial

advisor

to

Special

Committee

–

Perella

Weinberg

Partners

•

Provided opinion to the Special Committee upon which the Board was entitled to rely that the transaction

consideration was fair from a financial point of view to the Company’s unaffiliated stockholders

The Special Committee met 18 times between its formation and announcement of the transaction and

evaluated a range of alternatives including:

–

Status quo

–

continuing as a stand alone public company

–

Conducting a stock repurchase, implementing a dividend or undertaking a recapitalization

–

Sale of the Company, either to TPG/LGP or pursuant to an alternative sale process

The Board of Directors, assisted by outside counsel Cleary Gottlieb Steen & Hamilton LLP, acted on the

recommendation of the Special Committee

8

KEY SPECIAL COMMITTEE ACTIONS

While there were preliminary discussions between management and TPG, the Special Committee took complete

control

of

the

process

when

it

was

formed

and

never

relinquished

complete

control

–

At

the

direction

of

the

Special

Committee,

Cravath

sent

a

communication

to

TPG

on

October

21

freezing

the

process

and prohibiting communications with management without Special Committee permission

–

Same communication sent to Mr. Drexler and other members of management

–

Mr. Drexler did not attend any Special Committee meetings

Special Committee comfortable Just Saying No to TPG/LGP in furtherance of their fiduciary duties

–

On October 29, Special Committee sought and received assurance from Mr. Drexler that he would remain with the

Company if the Special Committee determined that the Company should remain stand-alone

–

On November 1, TPG/LGP put in an offer of $41.00 per share; in response, the Special Committee called off the

entire process; the Special Committee was comfortable with this outcome, which resulted in TPG coming back with a

significantly higher $45.00 offer

Price and terms renegotiation

–

Original price was agreed at $45.50 per share after rigorous negotiation

–

TPG

made

revised

$43.00

per

share

proposal

at

the

end

of

process

(TPG

reduced

the

price

due

to

weaker

updated

financials)

–

Special Committee considered: post-Christmas auction process; share repurchase / dividend / recapitalization; and

immediate transaction with a meaningful “go-shop”

–

Special Committee considered declining recent and anticipated financial performance and effect on share price and

on the various alternatives

–

Special Committee negotiated higher price and lower break-up fee, longer go-shop and higher reverse termination

fee

9

SALE AND OTHER ALTERNATIVES

Following its review of strategic alternatives, the Special Committee determined that a sale of the Company,

as opposed to remaining stand-alone or undertaking a different strategic alternative, represents the best

value for the Company's stockholders

–

Sale

delivers

significant

premium

to

J.Crew

shareholders

at

an

attractive

multiple

–

Declining recent and anticipated future financial performance

–

Execution risk associated with implementation of strategic plan

–

Conducting a stock repurchase, implementing a dividend or effecting a recapitalization would result in a

lower

implied

stock

price

and

value

to

stockholders

than

a

sale,

as

well

as

deferred

realization

of

value

and

greater execution risk

Pursuing a sale prior to the Company's third quarter earnings release and updated guidance was in the best

interests of stockholders

–

Fourth quarter outlook and full year performance expected to be materially lower than "Street" consensus

–

Shifted the risk of the Company underperforming during the holiday season to the acquiror

–

Pursuing

a

transaction

with

TPG

and

LGP,

with

a

meaningful

post-signing

“go-shop”

process,

was

the

best

way to accomplish a sale on this timetable

10

RECOMMENDATION OF THE SPECIAL COMMITTEE

Significant premium above stock’s trading levels over the months leading up to announcement and attractive

multiples

More

favorable

to

the

Compnay’s

stockholders

than

the

status

quo

or

other

strategic

alternatives

available

–

Special Committee's understanding of the business, operations and management of the Company,

including the Company's prospects as a stand-alone business

–

The Company's recent financial performance and management's reduced expectations for the Company's

short and long term future performance

–

Timing and execution risk associated with achieving $43.50 per share under alternatives to the sale to

TPG/LGP

Limited execution risk

–

Committed financing with no financing condition

–

Standard regulatory approvals process

–

High reverse termination fee and right to specific performance

54 day “go-shop”

(subsequently extended to 85 days), low break-up fees and full cooperation of management

The Special Committee unanimously determined that the TPG/LGP offer was advisable and

fair to and in the best interests of the Company and its unaffiliated stockholders

11

MEANINGFUL

POST-SIGNING

“GO-SHOP”

PROCESS

54 day initial “go-shop”

period through January 15, 2011, with low termination fee (approximately 0.9% of the

transaction equity value during “go-shop”)

–

At the direction of and under the supervision of the Special Committee, Perella Weinberg contacted a total of 58

parties through January 15

•

39 strategic parties and 19 financial parties

•

58 parties contacted included the two parties that had previously expressed interest in the Company

–

Three parties signed confidentiality agreements and were provided access to due diligence and, at the request of one

party, a management meeting

The merger agreement was subsequently amended to provide even more favorable terms for interested third parties

–

Extension

of

the

“go-shop”

period

for

an

additional

31

days

through

February

15,

2011

(85

day

total

“go-shop”

period)

–

Reduced termination fee to $20 million through the shareholder vote (approximately 0.66% of the transaction equity

value)

•

Termination

fee

previously

was

$27

million

during

“go-shop”

period

and

$54

million

during

no-shop

period

–

Elimination in certain circumstances of the match rights of affiliates of TPG and LGP

–

Reimbursement of expenses up to $3 million for a third party bidder in certain circumstances

–

Agreement by Mr. Drexler to a 2 year non-compete in the event a third party acquires the Company and offers Mr.

Drexler comparable employment terms but he declines to continue his employment

Special Committee met 9 times since November 23

12

CALENDAR OF CERTAIN EVENTS

TPG/LGP received updated financials with lower fourth quarter guidance and

long-term projections

November 16

TPG/LGP and the Special Committee agreed on an offer price of $45.50

November 14

TPG/LGP

submitted

initial

proposal

of

$41.00

per

share

which

the

Special

Committee rejected

November 1

Board appointed and mandated the Special Committee; Special Committee

appointed

Cravath,

Swaine

&

Moore

as

its

legal

counsel

and

Perella

Weinberg

Partners as its financial advisor (October 20/21)

October 15 –

21

Millard

Drexler

apprised

the

Board

members

of

TPG’s

potential

interest

October 7 –

11

Following preliminary discussions between TPG and management in

September, TPG expressed a bona fide interest in pursuing a transaction

October 5

13

CALENDAR OF CERTAIN EVENTS (CONT’D)

Merger agreement executed and announced; Company announced third

quarter

earnings

and

revised

guidance

that

is

lower

than

current

"Street"

consensus

November 23

TPG/ LGP informed Special Committee that they no longer wished to pursue a

transaction

Representative of Special Committee called TPG to better understand

reasons for their unwillingness to pursue a transaction

TPG/LGP communicated a $43.00/share offer

Special Committee deliberated and countered with $44.00/share, conditioned

on certain other key transaction terms, including terms of “go-shop”

After

further

negotiations,

TPG/LGP

and

Special

Committee

agreed

on

$43.50

and other key transaction terms

November 22

End

of

extended

“go-shop”

period

February 15

14

SELL SIDE ANALYST REACTIONS HAVE BEEN POSITIVE

“We believe this is a great deal for J. Crew shareholders, since the estimated takeover value represents a

28%

premium

to

our

previous

$34

fair

value

estimate.”

–

Morningstar

Equity

Research,

11/23/2010

“While we would view the current potential offer as fair, we believe there is the potential for other bidders to

enter the fray.”

–

Brean

Murray Carret

& Co., 11/23/2010

“We commend management on effecting this deal and although we expect pressure on the fundamentals,

we

expect

shares

to

trade

rangebound

around

the

deal

price.”

–

Janny

Capital

Markets,

11/23/2010

“We believe that the TPG Capital/Leonard Green proposal to acquire JCG at $43.50 per share fairly values

the

shareholders

of

JCG,

and

we

are

using

a

February

28,

2011,

closing

estimate.”

–

MKM

Partners,

11/23/2010

“If

this

deal

had

not

been

announced,

we

believe

JCG

shares

would

have

been

under

pressure

given

its

F4Q10

forecast

being

well

below

consensus

expectations”

–

Raymond

James,

11/24/2010

“We

believe

it

is

unlikely

that

the

company

will

receive

a

higher

offer

during

this

time

since

(1)

$43.50

per

share is already a premium to other recent deals such as GYMB (9x our FY10 EV/EBITDA estimate for JCG

versus

8x

consensus

estimate

for

GYMB),

(2)

its

comp

trends

have

weakened

further,

and

(3)

it

did

not

receive

any

other

bids

during

the

initial

“go-shop”

period”

-

Raymond

James,

1/20/2011

15

OTHER NOTABLE COMMENTARY

“At $43.50 a share, the J. Crew buyout carried a 16 percent premium to its stock price the day before the

deal…Some have balked that the offer is still well below J. Crew’s 52-week high of $50.96 in April. But the

price

looks

pretty

good,

considering

that

the

retailer

—

whose

earnings

have

taken

a

hit

of

late

—

was

trading

in

the

$30s

before

DealBook

broke

news

of

the

talks

on

Nov.

22”

–

NY

Times

(DealBook),

11/30/2010

“The

price

represents

a

premium

of

16%

to

J.Crew’s

Tuesday

closing

price

before

the

announcement

and

29% premium to last month’s average price. This is nearly 3% higher than our price estimate for J.Crew’s

stock

of

$42.35.

[A]

deal

at

$1

higher

is

a

good

fit.”

–

Forbes,

12/2/2010

“The deal may ultimately be right for shareholders. After all, the buyers are paying a 23 percent premium,

and

the

company's

earnings

have

been

lousy

of

late.”

–

NY

Times,

1/4/2011

“Orrico, whose fund owns J. Crew stock, said the board has taken steps to protect investors. These include

negotiating the right to seek other offers and a lower-than-average break-up fee that would make ending the

deal

less

expensive.

He

views

the

$43.50-a-share

bid

by

the

TPG

group

as

fairly

priced.”

–

Bloomberg,

1/13/2011

“I don’t

expect

competing

bids,

given

that

the

offer

is

full

and

the

valuation

is

more

than

fair,”

said

Randal

Konik, managing director of New York-based Jefferies & Co. He recommends holding the stock. “It’s

interesting that there are all these lawsuits, but to me the stock would be in the 20s right now if there was no

deal.”

–

Bloomberg, 1/18/2011

BUSINESS RESULTS, OUTLOOK AND VALUATION ANALYSIS

17

Q4 GUIDANCE

Q4 FY 2010 GUIDANCE

Q4 CONSENSUS EPS EVOLUTION

Q4 guidance of $0.30-$0.35 per share (vs. $0.50

Consensus and $0.61 in Q4 2009)

Comparable store sales in the negative mid single

digits

Direct sales growth in the positive low double digits

Gross margin decrease of approximately 600 to 700

basis points

Inventory increase mid-teens (~10% excluding a

partial pull forward of Spring deliveries)

$0.50

$0.30

$0.40

$0.50

$0.60

$0.70

Jan

Mar

May

Jul

Sep

Nov

Guidance:

$0.30 -

$0.35

Q4 2009:

$0.61

Consensus

18

SELECT RETAILERS NEXT QUARTER GUIDANCE AND STOCK PRICE REACTION

Note:

(1) Variance based on mid-point of guidance range

(1)

(1)

COMPANY

NEXT QUARTER GUIDANCE

VS LY

NEXT QUARTER GUIDANCE

VS CONSENSUS

1-DAY STOCK PRICE REACTION

(4)%

($0.94 –

$0.96 vs. $0.99)

(8)%

($0.94 –

$0.96 vs. $1.03)

(14)%

(24)%

($0.90 –

$1.20 vs. $1.38)

(18)%

($0.90 –

$1.20 vs. $1.28)

(6)%

(1)%

($1.71 –

$1.91 vs. $1.82)

(12)%

($1.71 –

$1.91 vs. $2.05)

(15)%

(1)%

($0.48 –

$0.53 vs. $0.51)

(6)%

($0.48 –

$0.53 vs. $0.54)

(1)%

Median

(2.6)%

(10.0)%

(9.9)%

11%

($0.41 –

$0.43 vs. $0.38)

(7)%

($0.41 –

$0.43 vs. $0.45)

(4)%

44%

($0.32 –

$0.40 vs. $0.25)

(12)%

($0.32 –

$0.40 vs. $0.41)

(9)%

5.2%

($0.88 –

$0.93 vs. $0.86)

(2)%

($0.88 –

$0.93 vs. $0.92)

(10)%

6%

($1.36 –

$1.42 vs. $1.31)

(1)%

($1.36 –

$1.42 vs. $1.40)

(5)%

Total Median

2.1%

(7.2)%

(7.2)%

(46)%

($0.30 –

$0.35 vs. $0.61)

(35)%

($0.30 –

$0.35 vs. $0.50)

N/A

19

J.CREW STAND-ALONE SHARE PRICE CONSIDERATIONS

SHARE PRICE PERFORMANCE SINCE 8/1/2010

ILLUSTRATIVE

SHARE

PRICE

–

NO

TRANSACTION

Source:

FactSet

as of 2/7/2011, 11/17/2010 Company Management projections, I/B/E/S

Notes:

Selected Peers represented by equal weighted index of Abercrombie & Fitch, Aeropostale, American Eagle, Ann Taylor, Bebe, Carter’s, Chico’s, Children’s Place, Coach, Coldwater Creek, The Dress Barn, The

Gap, Guess?, Limited Brands, New York & Company, Polo Ralph Lauren, Talbots, Under Armour, and Urban Outfitters. Peers indexed to Company share price of $36.49, the closing price on 11/19/2010

(1) XRT represents the S&P Retail Index

(2) Reference Price as of 11/19/2010

(3) Represents average Company P/E multiple since Q2 earnings announcement and guidance on August 26, 2010

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

Aug-10

Sep-10

Nov-10

Dec-10

Feb-11

XRT

5%

Peers

3%

J. Crew

19%

(1)

Reference Date: 11/19/2010

(2)

5%-8%

Decline

(3)

Return since 11/19

Reference Price

$36.49

Divide by: IBES Consensus FY2010E EPS

(11/19/2010)

$2.25

Reference Multiple

16.2x

Low

High

EPS based on revised guidance (MGMT's

FY2010E EPS)

$2.08

$2.13

Reference

Average Since 8/26

Low

High

Low

High

Multiple Applied

16.2x

16.2x

14.4x

14.4x

Implied Share Price

$33.73

$34.54

$29.89

$30.61

Implied Deal Premium Assuming $43.50 Offer

29.0%

25.9%

45.5%

42.1%

20

Source:

Schedule 13E-3, Exhibit (c)(2) filed with SEC on 12/6/2010

Notes:

(1)

Represent Q3 FY2010 ending debt and cash balances

(2)

Based on actual reported EBITDA of $315.9MM, adjusted for one-time items (benefit related to forfeited share-based awards, lease termination, and severance costs)

PERELLA WEINBERG ANALYSIS -

TRANSACTION OVERVIEW

(1)

(1)

US$ IN MM, EXCEPT MULTIPLES AND PER SHARE AMOUNTS

(2)

11/19/10 Close

Transaction Price

Share Price

$36.49

$43.50

Premium To:

Metric

11/19/10 Close

$36.49

0.0%

19.2%

1 Month Average

33.57

8.7%

29.6%

3 Month Average

33.66

8.4%

29.2%

Fully Diluted Shares Outstanding

68.4

69.1

Equity Value

$2,495

$3,005

Add: Debt

0

0

Less: Cash

(312)

(312)

Enterprise Value

$2,184

$2,693

EV/LTM EBITDA (Q3 2010)

$314

7.0x

8.6x

IBES CONSENSUS

EV/EBITDA

FY 2010E

$303

7.2x

8.9x

FY 2011E

317

6.9

8.5

Price/Earnings

FY 2010E

$2.25

16.2x

19.3x

FY 2011E

2.45

14.9

17.8

NOVEMBER 5 YEAR PROJECTIONS

EV/EBITDA

FY 2010E

$281

7.8x

9.6x

FY 2011E

326

6.7

8.3

Price/Earnings

FY 2010E

$2.07

17.6x

21.0x

FY 2011E

2.43

15.0

17.9

21

PERELLA WEINBERG ANALYSIS -

VALUATION SUMMARY: EQUITY VALUE PER SHARE

$40.00

$39.00

$38.00

$32.00

$30.00

$30.06

$52.00

$47.00

$50.00

$41.00

$50.00

$50.96

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

DCF

Precedents

Premia Paid

Comps

Equity Research Price Targets

52 Week Range

52 Week Range

Equity Research Price Targets

Public Companies

6.5x

–

8.0x

2010E

EBITDA,

16.0x

–

20.0x

2010E

EPS

6.0x

–

7.5x

2011E

EBITDA,

15.0x

–

17.0x

2011E

EPS

Relevant Transactions

7.5x –

9.5x LTM EBITDA

Discounted Cash Flow Analysis

11% -

15% WACC, 6.0x –

7.5x Exit Multiple

11/19/2010 Price: $36.49

Premiums Paid

1-Day

Premium:

11%

-

36%

1-Week

Premium:

18%

-

39%

1-Month

Premium:

22%

-

34%

Transaction Price: $43.50

Source:

Schedule 13E-3, Exhibit (c)(2) filed with SEC on 12/6/2010

$35.00

$43.00

7.5x –

9.5x 2010E EBITDA

22

PERELLA

WEINBERG

ANALYSIS

-

RELEVANT

TRANSACTIONS

Source:

Schedule 13E-3, Exhibit (c)(2) filed with SEC on 12/6/2010

Note:

(1) Based on actual reported EBITDA of $315.9MM, adjusted for one-time items (benefit related to forfeited share-based awards, lease termination benefit, and severance costs)

(2) Defined as Transaction Enterprise Value.  Figures shown in millions of US dollars

EV / LTM EBITDA

Specialty Apparel

Branded

Private Equity Buyer

Strategic Buyer

(2)

IMPLIED

TRANSACTION

MULTIPLE:

9.6x

2010E

EBITDA

(November

5

year

projections)

8.6x LTM EBITDA

Acquiror

Apax

Apollo

Lee Equity

Advent

V. Heusen

Bain

Jones

Federated

Consortium

Consortium

Apollo

Bain

Consortium

Consortium

Istithmar

Date Announced

12/05

3/07

7/07

8/09

3/10

10/10

11/04

2/05

3/05

5/05

11/05

1/06

6/06

7/06

6/07

Transaction Value

$1,547

$2,581

$259

$312

$3,136

$1,761

$400

$17,260

$6,213

$4,981

$1,305

$1,958

$5,604

$1,819

$942

6.6x

8.9x

9.4x

10.2x

12.2x

14.1x

8.7x

8.8x

8.2x

7.2x

7.9x

7.9x

7.8x

7.9x

8.1x

Branded Median: 8.9x

Specialty Apparel Median: 7.9x

Overall Median: 8.2x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

Tommy

Hilfiger

Claire's

Stores

Deb Shops

Charlotte

Russe

Tommy

Hilfiger

Gymboree

Barney's

May

Toys R Us

Neiman

Marcus

Linens n

Things

Burlington

Coat

Factory

Michaels

Stores

Petco

Barney's

23

PERELLA

WEINBERG

ANALYSIS

-

PUBLIC

COMPANIES

–

EV

/

FY2010E

EBITDA

Source:

Schedule 13E-3, Exhibit (c)(2) filed with SEC on 12/6/2010

Selected Peers

Other Peers

Company

Implied Transaction Multiple: 9.6x November 5 year projections

8.9x IBES Consensus

4.6x

5.5x

8.3x

10.6x

4.9x

5.5x

7.8x

8.2x

10.4x

16.8x

5.8x

6.0x

7.8x

7.2x

4.8x

6.9x

7.6x

6.1x

6.6x

Selected Peers Median: 6.9x

Other Peers Median: 6.6x

0.0x

5.0x

10.0x

15.0x

20.0x

Current Plan

IBES

Aeropostale

Chico's

A&F

Urban

Outfitters

The Gap

Dress Barn

American

Eagle

Talbots

Children's

Place

Ann Taylor

Coldwater

Creek

Carter's

Coach

Limited

Brands

Guess?

Polo

Bebe

Offer: 9.6x

Offer: 8.9x

24

Premiums Paid (2nd Quartile High and 3rd Quartile Low)

Implied Share Price

2nd Quartile High

$49.72

$47.08

$42.52

Median

44.25

41.05

39.89

3rd Quartile Low

40.55

40.07

38.48

11.1%

18.2%

21.5%

36.2%

38.8%

34.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

1 Day Prior

1 Week Prior

1 Month Prior

PERELLA

WEINBERG

ANALYSIS

-

PREMIUMS

PAID

Source:

Schedule 13E-3, Exhibit (c) (2) filed with SEC on 12/6/10

Note:

Analysis includes 100% cash transactions with U.S. targets from 2005 to present between $2.0Bn and $4.0Bn

19.2%

28.3%

37.3%

25.9%

21.0%

21.3%

Median of Precedents

Current Offer Premia

25

PERELLA

WEINBERG

ANALYSIS

-

EQUITY

RESEARCH

PRICE

TARGETS

Source:

Schedule 13E-3, Exhibit (c)(2) filed with SEC on 12/6/2010

Price Target Summary

High

Low

Median

Overall Estimates

$50.00

$30.00

$35.00

Oct. and Nov. Estimates

$44.00

$30.00

$34.00

Recommendation Summary

Buy

Sell

Hold

Overall Analysts

33%

5%

62%

Oct. and Nov. Analysts

13%

13%

75%

8/27

8/27

11/15

8/27

8/27

8/26

7/15

8/26

8/27

10/25

10/5

11/9

10/21

11/11

8/26

10/21

11/18

Buy

Buy

Buy

Buy

Buy

Buy

Hold

Hold

Hold

Hold

Hold

Hold

Hold

Hold

Hold

Hold

Sell

Upside to Current

37%

34%

21%

15%

10%

10%

1%

(4%)

(4%)

(4%)

(4%)

(7%)

(7%)

(10%)

(15%)

(15%)

(18%)

$50.00

$49.00

$44.00

$35.00

$35.00

$31.00

$30.00

$34.00

$33.00

$31.00

$35.00

$37.00

$40.00

$42.00

$40.00

$35.00

$34.00

Reference Price: $36.49

$25.00

$35.00

$45.00

$55.00

Oppenheimer

Baird

Atlantic

Equities

B. Murray

Wedbush

Weeden

JP Morgan

UBS

Jefferies

MKM

BOA

Nomura

P. Jaffray

Goldman

BMO

Janney

Morgan

Stanley

26

CONCLUSION

Significant premium above stock’s trading levels over the months leading up to announcement and attractive multiple

More favorable to the Company’s stockholders than the status quo or other strategic alternatives available

The Company’s recent financial performance and management’s reduced expectations for the Company’s short and

long term future performance

Limited execution risk

Meaningful post signing “Go-Shop”

period with low break-up fees and full cooperation of management

$43.50 per share in cash is a compelling offer and in the best interests of the Company and its

unaffiliated stockholders based on

APPENDIX

28

MEMBERS OF THE SPECIAL COMMITTEE

Mary Ann Casati  -

Ms. Casati has been a director since 2006. Ms. Casati is a founding partner of Circle Financial Group

LLC, a private wealth management membership practice, and has served as such since 2003. Prior to that, Ms. Casati was

a

partner

and

managing

director

of

The

Goldman

Sachs

Group,

Inc.

where

she

was

employed

for

twenty

years

and

developed and ran their Global Retailing Industry Investment Banking business.

David

House

-

Mr.

House

has

been

a

director

since

2007.

Mr.

House

is

Chairman

of

Serenoa

LLC,

a

family owned

investment business. Prior to that, Mr. House was Group President of the Global Network and Establishment Services and

Travelers Cheques

and Prepaid Services businesses at American Express Company, a diversified global travel and

financial services company, from 2000 until 2006 and served on its Global leadership Team during this period. He joined

American

Express

in

1993

and

held

various

senior

positions

there

prior

to

assuming

his

global

role

as

a

Group President.

Mr. House also serves on the Board of Directors of Modern Bank.

Stephen

Squeri

-

Mr.

Squeri

has

been

a

director

since

September

2010.

Mr.

Squeri

has

been

Group

President of

Global

Services

and

Chief

Information

Officer

at

American

Express

Company

since

2009.

Mr.

Squeri

joined

American

Express in 1985 and has held various senior positions since then, including executive vice president and chief information

officer from 2005 to 2009, president of the Global Commercial Card division from 2002 to 2005 and president

of

Establishment

Services

Canada

and

the

United

States

from

2000

to

2001.

Prior

to

joining

American

Express,

Mr. Squeri

was a management consultant at Arthur Andersen and Company from 1981 to 1985.

Josh Weston  -

Mr. Weston has been a director since 1998. Mr. Weston also served as Honorary Chairman of the Board

of Directors of Automatic Data Processing, a computing services business, from 1998 to 2004. Mr. Weston was Chairman

of the Board of Directors of Automatic Data Processing from 1996

until 1998, and Chairman and Chief Executive Officer for

more than five years prior thereto. Mr. Weston served on the Board of Directors and Compensation Committee of Gentiva

Health Services, Inc. and its predecessor company, the Olsten Corp., for over ten years until May 2009. He also previously

served

on

the

Board

of

Directors

of

Russ

Berrie

and

Company,

Inc.

from

1999

until

2007.