Total Net Sales Growth of 42% compared to Q1
FY20
Gross Margin of 68% vs. Q1 FY20 Gross Margin
of 55%
Gross Margin Expands 220 Basis Points
compared to Q1 FY19
J.Jill, Inc. (NYSE:JILL) today announced financial results for
the first quarter ended May 1, 2021.
Claire Spofford, President and Chief Executive Officer of
J.Jill, Inc. stated, “Our first quarter results reflect encouraging
progress against initiatives focused on strengthening the operating
model and driving healthy margin recovery. Our performance also
benefited from the strong rebound in consumer activity this spring
particularly as we anniversaried last year’s temporary store
closures. For the quarter, we delivered solid topline growth
balanced across both the direct and retail channels. In addition,
we were pleased with the strong customer response to our spring
product helping to drive increased full price selling and strong
conversion. These results combined with a continued focus on
disciplined inventory management led to significant year over year
gross margin expansion and Adjusted EBITDA improvement.”
Ms. Spofford continued, “As we enter the second quarter, we are
pleased with the momentum we are seeing in the business especially
over the strong Mother’s Day weekend. Looking ahead, we expect to
build on the progress we are making as we refine our operating
model and drive efficiencies across the business.”
For the first quarter ended May 1, 2021:
- Total net sales for the thirteen weeks ended May 1, 2021 were
up 41.9% to $129.1 million compared to $91.0 million for the
thirteen weeks ended May 2, 2020. First quarter 2020 sales were
negatively impacted by the closure of stores for approximately half
the quarter due to the COVID-19 pandemic.
- Direct to consumer net sales grew 32.7% over 2020 and
represented 57.5% of total net sales, compared to 61.4% in the
first quarter of fiscal 2020.
- Gross profit was $87.8 million compared to $50.2 million in the
first quarter of fiscal 2020. Gross margin was 68.0% compared to
55.1% in the first quarter of fiscal 2020. The year over year gross
margin increase was driven primarily by lower promotional offers
and stronger full price selling in both channels.
- SG&A was $79.1 million compared to $87.9 million in the
first quarter of fiscal 2020. In comparing the first quarter of
fiscal 2021 to fiscal 2020, SG&A benefited from $1.3 million of
lower non-recurring costs primarily the result of lower costs
incurred in response to the COVID-19 pandemic and non-cash gains of
$0.7 million associated with exiting store leases earlier than
anticipated. Excluding the one-time costs and COVID-19 related
costs from both periods as well as the non-cash gains from the
first quarter of 2021, SG&A as a percentage of total net sales
was 61.2% compared to 94.2% in the first quarter of fiscal
2020.
- Income from operations was $8.7 million compared to a loss of
$89.7 million in the first quarter of fiscal 2020.
- Adjusted Income from Operations*, which excludes the
non-recurring items and impairment charges, was $8.8 million
compared to Adjusted Loss from Operations* of $35.6 million in the
first quarter of fiscal 2020. For the first quarter of fiscal 2021,
the Company did not incur any impairment charges compared to $52.0
million of impairment charges in the first quarter of fiscal
2020.
- Interest expense was $4.8 million compared to $4.6 million in
the first quarter of fiscal 2020.
- During the first quarter of fiscal 2021, the Company recorded
$20.8 million of non-cash charges associated with mark-to-market
adjustments for the outstanding warrants and an embedded derivative
associated with the Company’s Priming term loan. The mark-to-market
adjustment is caused by the impact of J.Jill’s higher stock price
on the valuation of the company’s option to either paydown $4.9
million of principal on May 31, 2021 or issue additional shares to
the lenders and the related antidilution provision in the warrant
agreement.
- During the first quarter of fiscal 2021, the Company recorded
an income tax provision of $1.4 million compared to a benefit of
$24.1 million in the first quarter of fiscal 2020 and the effective
tax rate was -8.2% compared to 25.6% in the first quarter of
2020.
- Net loss was $18.3 million which includes $20.8 million related
to the fair value adjustment of the warrants and the Priming Loan
embedded derivative, compared to a loss of $70.3 million in the
first quarter of fiscal 2020.
- Net loss per share was $1.89 compared to a net loss of $7.91 in
the first quarter of fiscal 2020 including the impact of one-time
items. Excluding the impact of non-recurring items, Adjusted Net
Income per Diluted Share* in the first quarter of fiscal 2021 was
$0.20 compared to a loss of $3.24 in the first quarter of
2020.
- Adjusted EBITDA* for the first quarter of fiscal 2021 was $16.9
million compared to a loss of $25.8 million in the first quarter of
fiscal 2020.
- The Company closed 2 stores in the first quarter of fiscal 2021
and ended the quarter with 265 stores.
Balance Sheet Highlights
- The Company ended the first quarter of fiscal 2021 with $10.7
million in cash and $14.1 million of total availability under its
revolving credit agreement.
- Inventory at the end of the first quarter of fiscal 2021
decreased 21% to $59.3 million compared to $75.5 million at the end
of the first quarter of fiscal 2020.
*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.
Recent Developments
Subsequent to quarter-end, in accordance with the terms of the
Priming Loan, the Company issued 272,097 additional shares to the
Priming Lenders as of May 31, 2021. With the continued increase in
J.Jill’s stock price since the end of the quarter, the Company will
recognize an additional $39.0 million non-cash charge for the final
mark-to-market adjustment as of May 31, 2021. The value of the
warrant and embedded derivative liabilities are considered equity,
rather than liabilities, as of May 31, 2021, with no further
mark-to-market adjustments beyond that date.
Outlook
The impact of the COVID-19 pandemic and the pace at which there
are new developments, locally and globally, has created a great
deal of uncertainty. Consequently, the Company is not providing
financial guidance at this time but expects to close about 20
stores in fiscal 2021. The Company expects total capital spend in
fiscal 2021 to be approximately $10.0 million.
Conference Call Information
A conference call to discuss first quarter 2021 results is
scheduled for today, June 8, 2021, at 8:00 a.m. Eastern Time. Those
interested in participating in the call are invited to dial (844)
502-5028 or (647) 689-5145 if calling internationally. Please dial
in approximately 10 minutes prior to the start of the call and
reference Conference ID 6224209 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) 585-8367 or (416) 621-4642. The pin
number to access the telephone replay is 6224209. The telephone
replay will be available until Tuesday, June 15, 2021.
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 265 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
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.
- 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 Diluted Earnings (Loss) per 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 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 Income (Loss) from Operations, Adjusted
Net Income (Loss) 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 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 Income
(Loss) from Operations, Adjusted Net Income (Loss) and Adjusted
Diluted EPS to net income (loss) and EPS, the most directly
comparable GAAP financial measures, under “Reconciliation of GAAP
Net Income (Loss) to Adjusted EBITDA and Adjusted Net Income (Loss)
as well as Reconciliation of GAAP Operating Income (Loss) to
Adjusted Income (Loss) from Operations” and not rely solely on
Adjusted EBITDA, 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.” 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, but are not limited to, regional, national or global
political, economic, business, competitive, market and regulatory
conditions, including risks 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;
the impact of the COVID-19 epidemic on the Company and the economy
as a whole; post-pandemic changes in customer behavior and the
timeline of economic recovery; the Company’s ability to take
actions that are sufficient to eliminate the substantial doubt
about its ability to continue as a going concern; the Company’s
ability to regain compliance with the continued listing criteria of
the NYSE; the Company’s ability to execute its plan to regain
compliance with the continued listing criteria of the NYSE and to
continue to comply with applicable listing standards within the
available cure period; risks arising from the potential suspension
of trading of the Company’s common stock on the NYSE; and other
factors set forth under “Risk Factors” in our Annual Report on Form
10-K for the fiscal year ended February 1, 2020. 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 Loss
(Unaudited)
(Amounts in thousands, except
share and per share data)
For the Thirteen Weeks
Ended
May 1, 2021
May 2, 2020
Net sales
$
129,086
$
90,969
Costs of goods sold
41,260
40,804
Gross profit
87,826
50,165
Selling, general and administrative
expenses
79,139
87,908
Impairment of long-lived assets (a)
—
27,480
Impairment of goodwill
—
17,900
Impairment of intangible assets
—
6,620
Operating income (loss)
8,687
(89,743
)
Fair value adjustment of derivative
2,150
-
Fair value adjustment of warrants -
related party (b)
18,646
-
Interest expense
4,346
4,643
Interest expense, net - related party
461
-
Loss before provision for income taxes
(16,916
)
(94,386
)
Income tax provision (benefit)
1,392
(24,117
)
Net loss and total comprehensive loss
$
(18,308
)
$
(70,269
)
Net loss per common share attributable to
common shareholders (c)
Basic
$
(1.89
)
$
(7.91
)
Diluted
$
(1.89
)
$
(7.91
)
Weighted average number of common shares
outstanding (c)
Basic
9,666,353
8,882,183
Diluted
9,666,353
8,882,183
(a)
Represents impairment of long-lived assets
related to the right-of-use asset and leasehold improvements.
(b)
The fair value adjustment of warrants
increased due to the increase in J.Jill’s stock price since January
30, 2021.
(c)
All share information and balances have
been retroactively adjusted to reflect the 1-for-5 reverse stock
split that was effective November 9, 2020.
J.Jill, Inc.
Consolidated Balance
Sheets
(Unaudited)
(Amounts in thousands, except
common share data)
May 1, 2021
January 30, 2021
Assets
Current assets:
Cash
$
10,725
$
4,407
Accounts receivable
7,085
7,793
Inventories, net
59,298
58,034
Prepaid expenses and other current
assets
44,705
43,035
Total current assets
121,813
113,269
Property and equipment, net
68,742
73,906
Intangible assets, net
86,909
88,976
Goodwill
59,697
59,697
Operating lease assets, net
152,055
161,135
Other assets
179
199
Total assets
$
489,395
$
497,182
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
47,149
$
56,263
Accrued expenses and other current
liabilities
42,694
43,854
Current portion of long-term debt
2,799
2,799
Current portion of operating lease
liabilities
36,094
37,967
Borrowings under revolving credit
facility
23,044
11,146
Total current liabilities
151,780
152,029
Long-term debt, net of discount and
current portion
225,170
225,401
Long-term debt, net of discount and
current portion - related party
3,772
3,311
Deferred income taxes
14,202
13,835
Operating lease liabilities, net of
current portion
168,658
179,022
Warrants - related party
34,642
15,997
Derivative liability
4,586
2,436
Other liabilities
1,619
2,049
Total liabilities
604,429
594,080
Commitments and contingencies
Shareholders’ Equity
Common stock, par value $0.01 per share;
50,000,000 shares authorized; 9,711,710 and 9,631,633 shares issued
and outstanding at May 1, 2021 and January 30, 2021,
respectively
98
97
Additional paid-in capital
129,534
129,363
Accumulated deficit
(244,666
)
(226,358
)
Total shareholders’ deficit
(115,034
)
(96,898
)
Total liabilities and shareholders’
deficit
$
489,395
$
497,182
J.Jill, Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(Unaudited)
(Amounts in thousands)
For the Thirteen Weeks
Ended
May 1, 2021
May 2, 2020
Net loss
$
(18,308
)
$
(70,269
)
Fair value adjustment of derivative
2,150
-
Fair value adjustment of warrants -
related party (a)
18,646
-
Interest expense, net
4,346
4,643
Interest expense, net - related party
461
-
Income tax provision (benefit)
1,392
(24,117
)
Depreciation and amortization
7,576
9,036
Equity-based compensation expense (b)
443
676
Write-off of property and equipment
(c)
86
12
Adjustment for costs to exit retail stores
(d)
(719
)
—
Impairment of goodwill and other
intangible assets
—
24,520
Impairment of long-lived assets (e)
—
27,480
Other non-recurring items (f)
852
2,184
Adjusted EBITDA
$
16,925
$
(25,835
)
(a)
The fair value adjustment of warrants
increased due to the increase in J.Jill’s stock price since January
30, 2021.
(b)
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.
(c)
Represents the net gain or loss on the
disposal of fixed assets.
(d)
Represents non-cash gains associated with
exiting store leases earlier than anticipated.
(e)
Represents impairment of long-lived assets
related to the right-of-use asset and leasehold improvements.
(f)
Represents items management believes are
not indicative of ongoing operating performance, including
professional fees, retention expenses and costs related to the
COVID-19 pandemic.
J.Jill, Inc.
Reconciliation of GAAP
Operating Income (Loss) to Adjusted Income (Loss) from
Operations
(Unaudited)
(Amounts in thousands)
For the Thirteen Weeks
Ended
May 1, 2021
May 2, 2020
Operating income (loss)
$
8,687
$
(89,743
)
Adjustment for costs to exit retail stores
(a)
(719
)
—
Impairment of goodwill and other
intangible assets
—
24,520
Impairment of long-lived assets (b)
—
27,480
Other non-recurring items (c)
852
2,184
Adjusted income (loss) from operations
$
8,820
$
(35,559
)
(a)
Represents non-cash gains associated with
exiting store leases earlier than anticipated.
(b)
Represents impairment of long-lived assets
related to the right-of-use asset and leasehold improvements.
(c)
Represents items management believes are
not indicative of ongoing operating performance, including
professional fees, retention expenses and costs related to the
COVID-19 pandemic.
J.Jill, Inc.
Reconciliation of GAAP Net
Loss to Adjusted Net Income (Loss)
(Unaudited)
(Amounts in thousands, except
share and per share data)
For the Thirteen Weeks
Ended
May 1, 2021
May 2, 2020
Net loss and total comprehensive loss
$
(18,308
)
$
(70,269
)
Add: Income tax provision (benefit)
1,392
(24,117
)
Loss before provision for income tax
(16,916
)
(94,386
)
Add: Fair value adjustment of
derivative
2,150
—
Add: Fair value adjustment of warrants -
related party (a)
18,646
—
Add: Adjustment for costs to exit retail
stores (b)
(719
)
—
Add: Impairment of goodwill and other
intangible assets
—
24,520
Add: Impairment of long-lived assets
(c)
—
27,480
Add: Other non-recurring items (d)
852
2,184
Adjusted income (loss) before income tax
benefit
4,013
(40,202
)
Less: Adjusted tax provision (benefit)
(e)
1,292
(11,458
)
Adjusted net income (loss)
$
2,721
$
(28,744
)
Adjusted net loss per common share
attributable to common shareholders (f)
Basic
$
0.28
$
(3.24
)
Diluted (g)
$
0.20
$
(3.24
)
Weighted average number of common shares
outstanding (f)
Basic
9,666,353
8,882,183
Diluted (g)
13,791,298
8,882,183
(a)
The fair value adjustment of warrants
increased due to the increase in J.Jill’s stock price since January
30, 2021.
(b)
Represents non-cash gains associated with
exiting store leases earlier than anticipated.
(c)
Represents impairment of long-lived assets
related to the right-of-use asset and leasehold improvements.
(d)
Represents items management believes are
not indicative of ongoing operating performance, including
professional fees, retention expenses and costs related to the
COVID-19 pandemic.
(e)
The adjusted tax provision for adjusted
net income is estimated by applying a rate of 32.2% for the first
quarter of fiscal 2021 and 28.5% for the first quarter of fiscal
2020 to the adjusted loss before income tax benefit.
(f)
All share information and balances have
been retroactively adjusted to reflect the 1-for-5 reverse stock
split that was effective November 9, 2020.
(g)
The determination of the diluted shares in
the Adjusted EPS calculation assumes the outstanding warrants will
be converted into shares of common stock at the ratio caused by the
antidilution provision of the warrant agreement for the Company
choosing to issue additional shares to the Priming lenders on May
31, 2021 assuming the closing share price on the last trading day
of the quarter of $8.90 per share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210608005360/en/
Investors: Caitlin Churchill ICR, Inc.
investors@jjill.com 203-682-8200
Media: Chris Gayton J.Jill, Inc. media@jjill.com
617-689-7916
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