J.Jill, Inc. (NYSE:JILL) today announced financial results for
the first quarter ended May 4, 2019.
Linda Heasley, President and CEO of J.Jill, Inc. stated, “We are
disappointed with our first quarter performance and are taking
immediate actions to clear excess inventory and position the
business for improved results in the second half of the year. We
are early in the process of executing against our updated long-term
strategies, and our new leadership team across key areas of the
business is now in place and will begin to have greater impacts on
the business. We are incorporating key learnings from the first
quarter and will continue to assess investments in technology and
process improvements to ensure the team has the tools to satisfy
our core customers and capture the opportunities we see ahead for
the J.Jill brand.”
For the first quarter ended May 4, 2019:
- Total net sales for the thirteen weeks
ended May 4, 2019 were $176.5 million versus $181.5 million for the
thirteen weeks ended May 5, 2018.
- Total company comparable sales, which
includes comparable store and direct to consumer sales, decreased
by 3.3%.
- Direct to consumer net sales
represented 41.9% of total net sales, compared to 40.5% in the
first quarter of fiscal 2018.
- Gross profit decreased to $116.3
million from $120.3 million in the first quarter of fiscal 2018.
Gross margin was 65.9% compared to first quarter gross margin of
66.3% in fiscal 2018.
- SG&A was $105.4 million compared to
$100.3 million in the first quarter of fiscal 2018. First quarter
2018 SG&A included $1.3 million of non-recurring expenses and
$0.2 million of accelerated stock compensation expense as a result
of a CEO transition. Excluding these non-recurring expenses,
SG&A as a percentage of total net sales was 59.8% compared to
54.4% in the first quarter of fiscal 2018.
- Income from operations decreased to
$10.8 million from $20.0 million in the first quarter of fiscal
2018, which is inclusive of non-recurring SG&A expenses.
- Interest expense increased to $5.0
million from $4.8 million in the first quarter of fiscal 2018.
- Income tax expense was $1.4 million
compared to $4.0 million in the first quarter of fiscal 2018, and
the effective tax rate was 24.8% compared to 26.1% in the first
quarter of 2018.
- Net income decreased to $4.4 million
from $11.3 million in the first quarter of fiscal 2018, which is
inclusive of non-recurring SG&A expenses.
- Diluted earnings per share was $0.10
compared to $0.26 in the first quarter of fiscal 2018, which
included the impact of one-time expenses. Excluding these impacts,
Adjusted Diluted Earnings per Share* for the first quarter of
fiscal 2018 was $0.29.
- Adjusted EBITDA* for the first quarter
of fiscal 2019 decreased by 31.9% to $21.5 million from $31.5
million in the first quarter of fiscal 2018. As a percentage of
total net sales, Adjusted EBITDA was 12.2% compared to 17.4% in the
first quarter of fiscal 2018.
The Company ended the first quarter fiscal 2019 with $14.3
million in cash. Inventory at the end of the first quarter fiscal
2019 increased to $85.4 million compared to $77.5 million at the
end of the first quarter of fiscal 2018. The Company opened two
stores and closed one in the first quarter and ended the quarter
with 283 stores.
* Non-GAAP financial measures. Please see “Non-GAAP
Financial Measures” and “Reconciliation of GAAP Net Income to
Adjusted EBITDA and Adjusted Net Income” for more information.
Outlook
For the second quarter of fiscal 2019, we expect total
comparable sales to decrease 1% to 3% with total net sales expected
to be -1% to +1%. Diluted earnings per share is expected to be
-$0.08 to -$0.10, including a decrease of approximately $0.03 due
to our technology investment, compared to diluted earnings per
share of $0.23 and Adjusted Diluted Earnings per Share of $0.24 in
fiscal 2018.
We are revising our outlook for the full 2019 fiscal year. We
expect total comparable sales to decrease 2% to 4% with total net
sales expected to be flat to -2%. Diluted earnings per share is
expected to be in the range of $0.17 to $0.21, which includes a
decrease of $0.09 to $0.10 due to our technology investments,
compared to diluted earnings per share of $0.69 and Adjusted
Diluted Earnings per Share of $0.72 in fiscal 2018.
Conference Call Information
A conference call to discuss first quarter 2019 results is
scheduled for today, May 30, 2019, at 8:00 a.m. Eastern Time. Those
interested in participating in the call are invited to dial (844)
579-6824 or (763) 488-9145 if calling internationally. Please dial
in approximately 10 minutes prior to the start of the call and
reference Conference ID 4596864 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 live call and can be accessed
both online and by dialing (855) 859-2056 or (404) 537-3406. The
pin number to access the telephone replay is 4596864. The telephone
replay will be available until Thursday, June 6, 2019.
About J.Jill, Inc.
J.Jill is a premier omnichannel retailer and nationally
recognized women’s apparel brand committed to delighting customers
with great wear-now product. The brand represents an easy,
thoughtful and inspired style that reflects the confidence of
remarkable women who live life with joy, passion and purpose.
J.Jill offers a guiding customer experience through more than 280
stores nationwide and a robust e-commerce 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.
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, write-off of property and equipment, 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.
- Adjusted Net Income, which represents
net income (loss) plus other non-recurring expenses and one-time
items. We present Adjusted Net Income 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.
- Adjusted Diluted Earnings per Share
(“Adjusted Diluted EPS”) represents Adjusted Net Income 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 Net Income, 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 Net Income, and Adjusted Diluted
EPS should not be considered alternatives to, or substitutes for,
net income (loss) or EPS, which are calculated in accordance with
GAAP. In addition, other companies, including companies in our
industry, may calculate Adjusted EBITDA, Adjusted Net Income, 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 Net Income, and Adjusted
Diluted EPS to net income (loss) and EPS, the most directly
comparable GAAP financial measures, under “Reconciliation of GAAP
Net Income to Adjusted EBITDA and Adjusted Net Income” and not rely
solely on Adjusted EBITDA, Adjusted Net Income, 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.” Forward-looking statements include 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” 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 subject to inherent
uncertainties, risks 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 regional, national or global political, economic, business,
competitive, market and regulatory conditions, including risk
regarding, our ability to manage inventory or anticipate consumer
demand; changes in consumer confidence and spending; our
competitive environment; our failure to open new profitable stores
or successfully enter new markets and other factors set forth under
“Risk Factors” in our Annual Report on Form 10K. Any
forward-looking statement made in this press release 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 May 4,
2019 May 5, 2018 Net sales $ 176,452 $
181,541 Cost of goods sold 60,196 61,200 Gross profit
116,256 120,341 Selling, general and administrative expenses
105,445 100,294 Operating income 10,811 20,047 Interest
expense 5,007 4,817 Income before provision for
income taxes 5,804 15,230 Provision for income taxes 1,438
3,972 Net income and total comprehensive income $ 4,366 $
11,258 Net income per common share attributable to common
shareholders Basic $ 0.10 $ 0.27 Diluted $ 0.10 $ 0.26 Weighted
average number of common shares outstanding Basic 43,327,519
42,216,331 Diluted 44,478,153 43,407,414
J.Jill, Inc.
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except common
share data)
May 4,
2019
February 2, 2019 Assets Current assets: Cash $ 14,290
$ 66,204 Accounts receivable 7,647 4,007 Inventories, net 85,369
77,349 Prepaid expenses and other current assets 28,102
27,734 Total current assets 135,408 175,294 Property and
equipment, net 116,477 118,044 Intangible assets, net 133,361
136,177 Goodwill 197,026 197,026 Operating lease assets, net
221,262 — Other assets 306 447 Total assets $ 803,840
$ 626,988
Liabilities and Shareholders’ Equity Current
liabilities: Accounts payable $ 55,102 $ 55,012 Accrued expenses
and other current liabilities 48,460 45,306 Current portion of
long-term debt 2,799 2,799 Current portion of operating lease
liabilities 32,677 — Total current liabilities
139,038 103,117 Long-term debt, net of discount and current portion
237,120 237,464 Deferred income taxes 41,039 41,842 Operating lease
liabilities, net of current portion 216,493 — Other liabilities
2,150 30,770 Total liabilities 635,840
413,193 Commitments and contingencies
Shareholders’ Equity
Common stock, par value $0.01 per share;
250,000,000 shares authorized;
44,097,797 and 43,672,418 shares issued
and outstanding at May 4, 2019 and
February 2, 2019, respectively
441 437 Additional paid-in capital 121,565 121,635 Accumulated
earnings 45,994 91,723 Total shareholders’ equity
168,000 213,795 Total liabilities and shareholders’
equity $ 803,840 $ 626,988
J.Jill, Inc.
Reconciliation of GAAP Net Income to
Adjusted EBITDA
(Unaudited)
(Amounts in thousands)
For the Thirteen Weeks Ended May 4,
2019 May 5, 2018 Net income $ 4,366 $
11,258 Interest expense, net 5,007 4,817 Provision for income taxes
1,438 3,972 Depreciation and amortization 9,452 9,357 Equity-based
compensation expense (a) 1,202 760 Write-off of property and
equipment (b) 6 12 Other non-recurring expenses (c) —
1,346 Adjusted EBITDA $ 21,471 $ 31,522 (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 grants. (b): Represents net gain or loss on the disposal of
fixed assets. (c): Represents items management believes are not
indicative of ongoing operating performance. For the thirteen weeks
ended May 5, 2018, these expenses include costs related to a CEO
transition.
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 May 4,
2019 May 5, 2018 Net income and total
comprehensive income $ 4,366 $ 11,258 Add: Provision for income
taxes 1,438 3,972 Income before provision for income
taxes 5,804 15,230 Add: Other non-recurring expenses(a) — 1,346
Add: Accelerated equity-based compensation — 244
Adjusted Income before provision for income taxes 5,804 16,820
Less: Adjusted Tax Provision(b) 1,567 4,373 Adjusted
net income $ 4,237 $ 12,447 Adjusted net income per common share
attributable to common shareholders Basic $ 0.10 $ 0.29 Diluted $
0.10 $ 0.29 Weighted average number of common shares outstanding
Basic 43,327,519 42,216,331 Diluted 44,478,153 43,407,414 (a):
Represents items management believes are not indicative of
ongoing operating performance. For the thirteen weeks ended May 5,
2018, these expenses include costs related to a CEO transition.
(b): The adjusted tax provision for adjusted net income is
estimated by applying the effective tax rates of 27.0% and 26.0%
for the thirteen weeks ended May 4, 2019 and May 5, 2018,
respectively, to the adjusted income before provision for income
taxes.
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Investors:Caitlin Churchill/Joseph TeklitsICR,
Inc.investors@jjill.com203-682-8200Media:Chris GaytonJ.Jill,
Inc.media@jjill.com617-689-7916
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