J.Jill (NYSE: JILL) reported Q3 EPS of $0.15, $0.06 better than the analyst estimate of $0.09. Revenue for the quarter came in at $174.1 million versus the consensus estimate of $165.64 million.

Linda Heasley, CEO of J.Jill, Inc. stated, “Our third quarter results demonstrated progress on our near-term initiatives, including recent enhancements to our e-commerce site and a renewed emphasis on our product assortment. We had positive sales momentum, our inventory levels are lower than last year and in line with our expectations, and our e-commerce business benefited from the enhancements we delivered during the year. We are also making early progress on our longer-term strategic plan for the business.”

For the third quarter ended November 3, 2018:

• Total net sales for the thirteen weeks ended November 3, 2018 were $174.1 million versus $162.0 million for the thirteen weeks ended October 28, 2017. The 7.5% increase in total net sales versus the prior year was partially driven by the calendar shift created by the fifty-third week in fiscal 2017.
• Total company comparable sales, which includes comparable store and direct to consumer sales, increased by 1.0%.
• Direct to consumer net sales represented 39.8% of total net sales, compared to 39.5% in the third quarter of fiscal 2017.
• Gross profit increased to $115.5 million from $108.5 million in the third quarter of fiscal 2017. Gross margin was 66.3% compared to third quarter gross margin of 67.0% in fiscal 2017.
• SG&A was $101.6 million compared to $95.2 million in the third quarter of fiscal 2017. Third quarter 2017 SG&A included $0.7 million of non-recurring expenses related to the Company’s transition to a public company. Excluding these one-time expenses from last year’s figures, SG&A as a percentage of total net sales was 58.3% compared to 58.4% in the third quarter of fiscal 2017.
• Income from operations, inclusive of non-recurring SG&A expenses, increased to $13.9 million from $13.3 million in the third quarter of fiscal 2017.
• Adjusted EBITDA* for the third quarter of fiscal 2018 increased by 5.0% to $24.2 million from $23.0 million in the third quarter of fiscal 2017. As a percentage of total net sales, Adjusted EBITDA was 13.9% compared to 14.2% in the third quarter of fiscal 2017.
• Interest expense increased to $4.7 million from $4.5 million in the third quarter of fiscal 2017.
• Income tax expense was $2.5 million compared to $2.8 million in the third quarter of fiscal 2017, and the effective tax rate was 27.1% compared to 31.6% in the third quarter of 2017.
• Diluted earnings per share was $0.15 compared to $0.14 in the third quarter of fiscal 2017, which included the impact of non-recurring expenses. Third quarter 2018 diluted earnings per share included approximately $0.03 per share benefit due to the calendar shift created by the fifty-third week in fiscal 2017 and included a $0.01 benefit from the lower effective tax rate of 27.1% compared to 31.6% in the third quarter of 2017.
• Adjusted diluted earnings per share* for the third quarter of fiscal 2018, which included the impact of the calendar shift described above, was $0.15 compared to $0.13 in the third quarter of fiscal 2017. Adjusted diluted earnings per share uses 26% and 40% tax rate assumptions in fiscal 2018 and 2017 respectively. The change in the assumed tax rate between fiscal 2018 and 2017, resulting from the U.S. Tax Cuts and Jobs Act enacted in December 2017, resulted in a benefit to adjusted diluted earnings per share of $0.03 in the third quarter of fiscal 2018.

GUIDANCE:

J.Jill sees Q4 2018 EPS of $0.00-$0.02, versus the consensus of $0.05.

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