News Details

J.Jill, Inc. Announces First Quarter 2023 Results

June 7, 2023

Net Sales of $149.4 Million vs. $157.1 Million in Q1 FY2022; Total Company Comparable Sales Down 2.7% vs. Q1 FY2022

Operating Income Increase of 6.3% and Operating Income Margin increase of 180bps vs. Q1 FY2022

Inventory Down 14.9% vs. End of Q1 FY2022

Successfully Completed Debt Refinancing Transactions

J.Jill, Inc. (NYSE:JILL) today announced financial results for the first quarter ended April 29, 2023.

Claire Spofford, President and Chief Executive Officer of J.Jill, Inc. stated, “Our first quarter results demonstrate the ongoing execution of our disciplined operating model especially as we anniversaried a strong comparison to last year. Our customer continues to gravitate to the newness we are flowing regularly in our assortment, but has become increasingly discerning with her spending decisions in light of the evolving macro environment. As we move into the remainder of the year, we will maintain our disciplined approach to managing the business as we continue to navigate a dynamic environment.”

For the first quarter ended April 29, 2023:

  • Total net sales for the thirteen weeks ended April 29, 2023 were down 4.9% to $149.4 million compared to $157.1 million for the thirteen weeks ended April 30, 2022.
  • Total company comparable sales, which includes comparable store and direct to consumer sales, decreased by 2.7%.
  • Direct to consumer net sales, which represented 45.0% of sales, were down 7.7% compared to the first quarter of fiscal 2022.
  • Gross profit was $107.5 million compared to $109.5 million in the first quarter of fiscal 2022. Gross margin was 72.0% compared to 69.7% in the first quarter of fiscal 2022. The year over year gross margin increase benefited from lower freight costs compared to the first quarter of fiscal 2022.
  • SG&A was $82.1 million compared to $85.6 million in the first quarter of fiscal 2022. In comparing the first quarter of fiscal 2023 to fiscal 2022, excluding non-recurring and other one-time costs, SG&A as a percentage of total net sales was 55.0% compared to 54.6% in the first quarter of fiscal 2022.
  • Income from operations was $25.4 million compared to $23.9 million in the first quarter of fiscal 2022. Adjusted Income from Operations*, which excludes adjustments for costs to exit retail stores as well as impairment charges was $25.4 million compared to $23.8 million in the first quarter of fiscal 2022.
  • Interest expense was $6.1 million compared to $4.5 million in the first quarter of fiscal 2022.
  • During the first quarter of fiscal 2023, the Company recorded an income tax provision of $2.0 million compared to $5.0 million in the first quarter of fiscal 2022 and the effective tax rate was 29.9% compared to 25.8% in the first quarter of fiscal 2022.
  • Net income was $4.6 million compared to $14.4 million in the first quarter of fiscal 2022.
  • Net Income per Diluted Share was $0.32 compared to $1.02 in the first quarter of fiscal 2022 including the impact of non-recurring items and a $12.7 million Loss on debt refinancing as part of the Company's Term Loan refinancing in the first quarter of fiscal 2023. Excluding the impact of these items, Adjusted Net Income per Diluted Share* in the first quarter of fiscal 2023 was $0.96 compared to $1.02 in the first quarter of fiscal 2022. The decrease in the first quarter of fiscal 2023 was driven by higher interest expense.
  • Adjusted EBITDA* for the first quarter of fiscal 2023 was $31.9 million compared to $31.3 million in the first quarter of fiscal 2022. Adjusted EBITDA margin* for the first quarter of fiscal 2023 was 21.3% compared to 19.9% in the first quarter of fiscal 2022.
  • The Company opened 2 new stores in the first quarter of fiscal 2023 and ended the quarter with 245 stores.

Balance Sheet Highlights

  • The Company successfully refinanced its funded debt during the quarter, reducing principal outstanding by approximately $50 million dollars and extending maturity to May 2028.
  • The Company ended the first quarter of fiscal 2023 with $27.9 million in cash and $34.2 million of total availability under its revolving credit agreement.
  • Inventory at the end of the first quarter of fiscal 2023 decreased 14.9% to $53.8 million compared to $63.2 million at the end of the first quarter of fiscal 2022.

*Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP Net Income to Adjusted EBITDA, Adjusted Income from Operations and Adjusted Net Income” for more information.

Outlook

For the second quarter of fiscal 2023, the Company expects revenues to be down mid-single digits compared to the second quarter of fiscal 2022, and for Adjusted EBITDA to be in the range of $26.0 million and $31.0 million.

For fiscal 2023, the Company now expects Annual Adjusted EBITDA dollars to be down mid-single digits compared to fiscal 2022, including approximately $2 million benefit from the 53rd week. The Company continues to expect total capital expenditures of about $18.0 million and a flat store count to end fiscal 2023.

Conference Call Information

A conference call to discuss first quarter 2023 results is scheduled for today, June 7, 2023, at 8:00 a.m. Eastern Time. Those interested in participating in the call are invited to dial (888) 330-3391 or (646) 960-0845 if calling internationally. Please dial in approximately 10 minutes prior to the start of the call and reference Conference ID 2289963 when prompted. A live audio webcast of the conference call will be available online at http://investors.jjill.com/Investors-Relations/News-Events/events.

A taped replay of the conference call will be available approximately two hours following the call and can be accessed both online and by dialing (800) 770-2030 or (647) 362-9199. The pin number to access the telephone replay is 2289963. The telephone replay will be available until Wednesday, June 14, 2023.

About J.Jill, Inc.

J.Jill is a national lifestyle brand that provides apparel, footwear and accessories designed to help its customers move through a full life with ease. The brand represents an easy, thoughtful, and inspired style that celebrates the totality of all women and designs its products with its core brand ethos in mind: keep it simple and make it matter. J.Jill offers a high touch customer experience through over 200 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston. For more information, please visit www.jjill.com or http://investors.jjill.com. The information included on our websites is not incorporated by reference herein.

Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), we use the following non-GAAP measures of financial performance:

  • Adjusted EBITDA, which represents net income (loss) plus interest expense, provision (benefit) for income taxes, depreciation and amortization, equity-based compensation expense, impairments of goodwill, intangible assets and other long-lived assets, fair value adjustments of warrants and derivatives and other non-recurring expenses and one-time items. We present Adjusted EBITDA on a consolidated basis because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative operating performance from period to period. We also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance of our business and for evaluating on a quarterly and annual basis actual results against such expectations. Further, we recognize Adjusted EBITDA as a commonly used measure in determining business value and as such, use it internally to report results. We also use Adjusted EBITDA margin which represents, for any period, Adjusted EBITDA as a percentage of net sales.
  • Adjusted Income (Loss) from Operations, which represents operating income (loss) plus impairments of goodwill, intangible assets and other long-lived assets and other non-recurring expense and one-time items. We present Adjusted Income (Loss) from Operations because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts, and other interested parties as a measure of our comparative operating performance from period to period.
  • Adjusted Net Income (Loss), which represents net income (loss) plus impairments of goodwill, intangible assets and other long-lived assets, fair value adjustments of warrants and derivatives and other non-recurring expenses and one-time items. We present Adjusted Net Income (Loss) because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative operating performance from period to period.
  • Adjusted Net Income per Diluted Share (“Adjusted Diluted EPS”) represents Adjusted Net Income (Loss) divided by the number of fully diluted shares outstanding. Adjusted Diluted EPS is presented as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative operating performance from period to period.

While we believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Diluted EPS are useful in evaluating our business, they are non-GAAP financial measures that have limitations as analytical tools. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Diluted EPS should not be considered alternatives to, or substitutes for, Net Income (Loss), Income (Loss) from Operations or Net Income (Loss) per Diluted Share, which are calculated in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Diluted EPS differently or not at all, which reduces the usefulness of such non-GAAP financial measures as tools for comparison. We recommend that you review the reconciliation and calculation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Diluted EPS to Net Income (Loss), Income (Loss) from Operations and Net Income (Loss) per Diluted Share, the most directly comparable GAAP financial measures, under “Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA,” “Reconciliation of GAAP Operating Income to Adjusted Income from Operations” and “Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income” and not rely solely on Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss), Adjusted Diluted EPS or any single financial measure to evaluate our business.

Forward-Looking Statements

This press release contains, and oral statements made from time to time by our representatives may contain, “forward-looking statements.” All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements, including, among others, statements under “Outlook” and other statements identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects,” “goal,” “target” (although not all forward-looking statements contain these identifying words) and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on our current expectations and assumptions regarding capital market conditions, our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are inherently subject to a number of risks, uncertainties, potentially inaccurate assumptions and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, regional, national or global political, economic, business, competitive, market and regulatory conditions, including risks regarding: (1) our ability to successfully expand and increase sales, including by opening new retail stores on a profitable basis, to maintain and enhance a strong brand image, and to optimize our omnichannel operations; (2) changes in consumer confidence, preference and spending, and our ability to adapt to such changes; (3) the competitive environment we operate in; (4) post-pandemic changes in consumer behavior and the timeline of overall economic recovery; (5) our level of indebtedness and ability to work with lenders to pursue options to refinance; and (6) other factors that may be described in our filings with the Securities and Exchange Commission (the “SEC”), including the factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023. You are encouraged to read our filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. We caution investors, potential investors and others not to place considerable reliance on the forward-looking statements in this press release and in the oral statements made by our representatives. Any such forward-looking statement speaks only as of the date on which it is made. J.Jill undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

(Tables Follow)

 

J.Jill, Inc.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(Amounts in thousands, except share and per share data)

 

 

 

For the Thirteen Weeks Ended

 

 

 

April 29, 2023

 

 

April 30, 2022

 

Net sales

 

$

149,420

 

 

$

157,069

 

Costs of goods sold

 

 

41,880

 

 

 

47,606

 

Gross profit

 

 

107,540

 

 

 

109,463

 

Selling, general and administrative expenses

 

 

82,146

 

 

 

85,578

 

Operating income

 

 

25,394

 

 

 

23,885

 

Loss on debt refinancing

 

 

12,702

 

 

 

 

Interest expense, net

 

 

5,057

 

 

 

3,658

 

Interest expense, net - related party

 

 

1,074

 

 

 

802

 

Income before provision for income taxes

 

 

6,561

 

 

 

19,425

 

Income tax provision

 

 

1,965

 

 

 

5,010

 

Net income and total comprehensive income

 

$

4,596

 

 

$

14,415

 

Net income per common share attributable to common shareholders

 

 

 

 

 

 

Basic

 

$

0.32

 

 

$

1.04

 

Diluted

 

$

0.32

 

 

$

1.02

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

Basic

 

 

14,250,811

 

 

 

13,874,546

 

Diluted

 

 

14,510,008

 

 

 

14,171,082

 

 

J.Jill, Inc.
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except common share data)

 

 

 

April 29, 2023

 

 

January 28, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,891

 

 

$

87,053

 

Accounts receivable

 

 

8,153

 

 

 

7,039

 

Inventories, net

 

 

53,788

 

 

 

50,585

 

Prepaid expenses and other current assets

 

 

17,313

 

 

 

16,143

 

Total current assets

 

 

107,145

 

 

 

160,820

 

Property and equipment, net

 

 

53,791

 

 

 

53,497

 

Intangible assets, net

 

 

71,452

 

 

 

73,188

 

Goodwill

 

 

59,697

 

 

 

59,697

 

Operating lease assets, net

 

 

115,564

 

 

 

119,118

 

Other assets

 

 

318

 

 

 

97

 

Total assets

 

$

407,967

 

 

$

466,417

 

Liabilities and Shareholders’ Equity (Deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

41,858

 

 

$

39,306

 

Accrued expenses and other current liabilities

 

 

38,846

 

 

 

49,730

 

Current portion of long-term debt

 

 

8,750

 

 

 

3,424

 

Current portion of operating lease liabilities

 

 

34,160

 

 

 

34,527

 

Total current liabilities

 

 

123,614

 

 

 

126,987

 

Long-term debt, net of discount and current portion

 

 

151,787

 

 

 

195,517

 

Long-term debt, net of discount and current portion - related party

 

 

 

 

 

9,719

 

Deferred income taxes

 

 

9,956

 

 

 

10,059

 

Operating lease liabilities, net of current portion

 

 

118,361

 

 

 

123,101

 

Other liabilities

 

 

924

 

 

 

1,253

 

Total liabilities

 

 

404,642

 

 

 

466,636

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ Equity (Deficit)

 

 

 

 

 

 

Common stock, par value $0.01 per share; 50,000,000 shares authorized; 10,580,802 and 10,165,361 shares issued and outstanding at April 29, 2023 and January 28, 2023, respectively

 

 

107

 

 

 

102

 

Additional paid-in capital

 

 

210,948

 

 

 

212,005

 

Accumulated deficit

 

 

(207,730

)

 

 

(212,326

)

Total shareholders’ equity (deficit)

 

 

3,325

 

 

 

(219

)

Total liabilities and shareholders’ equity (deficit)

 

$

407,967

 

 

$

466,417

 

 

J.Jill, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(Unaudited)
(Amounts in thousands)

 
 

 

 

For the Thirteen Weeks Ended

 

 

 

April 29, 2023

 

 

April 30, 2022

 

Net income

 

$

4,596

 

 

$

14,415

 

Interest expense, net

 

 

5,057

 

 

 

3,658

 

Interest expense, net - related party

 

 

1,074

 

 

 

802

 

Income tax provision

 

 

1,965

 

 

 

5,010

 

Depreciation and amortization

 

 

5,571

 

 

 

6,713

 

Equity-based compensation expense (a)

 

 

878

 

 

 

742

 

Write-off of property and equipment (b)

 

 

20

 

 

 

92

 

Adjustment for costs to exit retail stores (c)

 

 

 

 

 

(243

)

Loss on debt refinancing (d)

 

 

12,702

 

 

 

 

Impairment of long-lived assets (e)

 

 

 

 

 

108

 

Adjusted EBITDA

 

$

31,863

 

 

$

31,297

 

Net sales

 

$

149,420

 

 

$

157,069

 

Adjusted EBITDA margin

 

 

21.3

%

 

 

19.9

%

(a)

Represents expenses associated with equity incentive instruments granted to our management and board of directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grant.

(b)

Represents the net gain or loss on the disposal of fixed assets.

(c)

Represents non-cash adjustments associated with exiting store leases earlier than anticipated.

(d)

Represents loss on the repayment of Priming Term Loan Credit Agreement and the Subordinated Term Loan Credit Agreement.

(e)

Represents impairment of long-lived assets related to leasehold improvements.

 

J.Jill, Inc.
Reconciliation of GAAP Operating Income to Adjusted Income from Operations
(Unaudited)
(Amounts in thousands)

 

 

 

For the Thirteen Weeks Ended

 

 

 

April 29, 2023

 

 

April 30, 2022

 

 

 

 

 

 

 

 

Operating income

 

$

25,394

 

 

$

23,885

 

Adjustment for costs to exit retail stores (a)

 

 

 

 

 

(243

)

Impairment of long-lived assets (b)

 

 

 

 

 

108

 

Adjusted income from operations

 

$

25,394

 

 

$

23,750

 

 

 

 

 

 

 

 

(a)

Represents non-cash adjustments associated with exiting store leases earlier than anticipated.

(b)

Represents impairment of long-lived assets related to leasehold improvements.

 

J.Jill, Inc.
Reconciliation of GAAP Net Income to Adjusted Net Income
(Unaudited)
(Amounts in thousands, except share and per share data)

 

 

 

For the Thirteen Weeks Ended

 

 

 

April 29, 2023

 

 

April 30, 2022

 

Net income and total comprehensive income

 

$

4,596

 

 

$

14,415

 

Add: Income tax provision

 

 

1,965

 

 

 

5,010

 

Income before provision for income tax

 

 

6,561

 

 

 

19,425

 

Add: Adjustment for costs to exit retail stores (a)

 

 

 

 

 

(243

)

Add: Loss on debt refinancing (b)

 

 

12,702

 

 

 

 

Add: Impairment of long-lived assets (c)

 

 

 

 

 

108

 

Adjusted income before income tax provision

 

 

19,263

 

 

 

19,290

 

Less: Adjusted tax provision (d)

 

 

5,374

 

 

 

4,900

 

Adjusted net income

 

$

13,889

 

 

$

14,390

 

 

 

 

 

 

 

 

Adjusted net income per share attributable to common shareholders

 

 

 

 

 

 

Basic

 

$

0.97

 

 

$

1.04

 

Diluted

 

$

0.96

 

 

$

1.02

 

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,250,811

 

 

 

13,874,546

 

Diluted

 

 

14,510,008

 

 

 

14,171,082

 

(a)

Represents non-cash adjustments associated with exiting store leases earlier than anticipated.

(b)

Represents loss on the repayment of Priming Term Loan Credit Agreement and the Subordinated Term Loan Credit Agreement.

(c)

Represents impairment of long-lived assets related to leasehold improvements.

(d)

The adjusted tax provision for adjusted net income is estimated by applying a rate of 27.9% for the first quarter of fiscal 2023 and 25.4% for the first quarter of fiscal 2022 to the adjusted net income before income tax provision.

 

Investor Relations:
Caitlin Churchill
ICR, Inc.
investors@jjill.com
203-682-8200

Business and Financial Media:
Ariel Kouvaras
Sloane & Company
akouvaras@sloanepr.com
973-897-6241

Brand Media:
Meredith Schwenk
J.Jill, Inc.
media@jjill.com
617-376-4399

Source: J.Jill, Inc.