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J.Jill, Inc. Announces Second Quarter 2019 Results

August 27, 2019 6:45 AM

QUINCY, Mass.--(BUSINESS WIRE)-- J.Jill, Inc. (NYSE: JILL) today announced financial results for the second quarter ended August 3, 2019.

Linda Heasley, President and CEO of J.Jill, Inc. stated, “In the second quarter, we took necessary steps to address the challenging start we had to this year. We completed an evaluation of our infrastructure to increase efficiencies and took actions to begin right-sizing our organization. We continue to balance our on-hand inventory levels, while remaining focused on customer experience and product. We have made progress, and there is still more work to be done.”

Ms. Heasley continued, “We have a fiercely loyal customer and we are intently focused on delivering the product and shopping experience she expects from J.Jill. We saw improved full price selling during the summer months and maintained positive traffic for the quarter. We have also further utilized customer insights to assist in reviewing the floorsets for the coming months and we look forward to continuing to improve our go to market processes while enhancing the strong foundation on which the brand is built.”

For the second quarter ended August 3, 2019:

For the twenty-six weeks ended August 3, 2019 :

The Company ended the second quarter fiscal 2019 with $29.1 million in cash. Inventory at the end of the second quarter fiscal 2019 increased to $70.0 million compared to $61.6 million at the end of the second quarter of fiscal 2018. On-hand inventory, which excludes in-transit as well as units removed from sale and held for disposal, increased approximately 2% versus the prior year period. The Company opened four stores and closed one in the second quarter and ended the quarter with 286 stores.

* 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 third 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 are expected to be $0.10 to $0.12, compared to Diluted earnings per share of $0.15 in the third quarter of fiscal 2018.

For the full 2019 fiscal year, we continue to expect total comparable sales to decrease 2% to 4% with total net sales expected to be flat to down 2%. We now expect Adjusted Diluted Earnings per Share, which excludes the impact of the non-cash impairment charge and other non-recurring expenses in the second quarter fiscal 2019, to be in the range of $0.20 to $0.24 versus our prior diluted earnings per share of $0.17 to $0.21. This is compared to diluted earnings per share of $0.69 and Adjusted Diluted Earnings per Share of $0.72 in fiscal 2018. Adjusted Diluted Earnings per Share for full year fiscal 2019 includes a $0.09 negative impact due to our technology investments that were paused in the second quarter of fiscal 2019.

Conference Call Information

A conference call to discuss second quarter 2019 results is scheduled for today, August 27, 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 5299018 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 5299018. The telephone replay will be available until Tuesday, September 3, 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:

While we believe that Adjusted EBITDA, Adjusted Income from Operations, 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 Income from Operations, 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 Income from Operations, 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 Income from Operations, 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 as well as Reconciliation of GAAP Operating Income to Adjusted Income from Operations” and not rely solely on Adjusted EBITDA, Adjusted Income from Operations, 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

August 3, 2019

August 4, 2018

Net sales

$

180,744

$

179,713

Cost of goods sold

75,403

63,058

Gross profit

105,341

116,655

Selling, general and administrative expenses

200,126

97,365

Operating (loss) income

(94,785

)

19,290

Interest expense

5,019

4,853

(Loss) income before provision for income taxes

(99,804

)

14,437

Income tax (benefit) provision

(3,069

)

3,952

Net (loss) income and total comprehensive income

$

(96,735

)

$

10,485

Net (loss) income per common share attributable to common shareholders:

Basic

$

(2.21

)

$

0.24

Diluted

$

(2.21

)

$

0.23

Weighted average number of common shares outstanding:

Basic

43,793,348

42,855,366

Diluted

43,793,348

44,716,193

For the Twenty-Six Weeks Ended

August 3, 2019

August 4, 2018

Net sales

$

357,196

$

361,254

Cost of goods sold

135,599

124,258

Gross profit

221,597

236,996

Selling, general and administrative expenses

305,571

197,659

Operating (loss) income

(83,974

)

39,337

Interest expense

10,026

9,670

(Loss) income before provision for income taxes

(94,000

)

29,667

Income tax (benefit) provision

(1,631

)

7,924

Net (loss) income and total comprehensive income

$

(92,369

)

$

21,743

Net (loss) income per common share attributable to common shareholders:

Basic

$

(2.12

)

$

0.51

Diluted

$

(2.12

)

$

0.49

Weighted average number of common shares outstanding:

Basic

43,560,434

42,535,849

Diluted

43,560,434

44,061,804

J.Jill, Inc.

Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands, except common share data)

August 3, 2019

February 2, 2019

Assets

Current assets:

Cash

$

29,124

$

66,204

Accounts receivable

5,997

4,007

Inventories, net

70,003

77,349

Prepaid expenses and other current assets

26,534

27,734

Total current assets

131,658

175,294

Property and equipment, net

114,814

118,044

Goodwill and intangible assets, net

232,143

333,203

Operating lease assets, net

216,338

—

Other assets

252

447

Total assets

$

695,205

$

626,988

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

52,955

$

55,012

Accrued expenses and other current liabilities

47,204

45,306

Current portion of long-term debt

2,799

2,799

Current portion of operating lease liabilities

32,632

—

Total current liabilities

135,590

103,117

Long-term debt, net of discount and current portion

236,781

237,464

Deferred income taxes

35,216

41,842

Operating lease liabilities, net of current portion

212,959

—

Other liabilities

2,073

30,770

Total liabilities

622,619

413,193

Commitments and contingencies

Shareholders’ Equity

Common stock, par value $0.01 per share; 250,000,000 shares authorized;
44,005,112 and 43,672,418 shares issued and outstanding at August 3, 2019 and
February 2, 2019, respectively

440

437

Additional paid-in capital

122,887

121,635

Accumulated (deficit) earnings

(50,741

)

91,723

Total shareholders’ equity

72,586

213,795

Total liabilities and shareholders’ equity

$

695,205

$

626,988

J.Jill, Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(Unaudited)

(Amounts in thousands)

For the Thirteen Weeks Ended

August 3, 2019

August 4, 2018

Net (loss) income

$

(96,735

)

$

10,485

Interest expense, net

5,019

4,853

Income tax (benefit) provision

(3,069

)

3,952

Depreciation and amortization

9,396

8,892

Equity-based compensation expense (a)

1,214

1,083

Write-off of property and equipment (b)

8

16

Impairment of goodwill and indefinite-lived intangible assets

95,428

—

Impairment of long lived assets(c)

2,064

—

Other non-recurring expenses (d)

(740

)

—

Adjusted EBITDA

$

12,585

$

29,281

For the Twenty-Six Weeks Ended

August 3, 2019

August 4, 2018

Net (loss) income

$

(92,369

)

$

21,743

Interest expense, net

10,026

9,670

Income tax (benefit) provision

(1,631

)

7,924

Depreciation and amortization

18,848

18,249

Equity-based compensation expense (a)

2,416

1,843

Write-off of property and equipment (b)

14

28

Impairment of goodwill and indefinite-lived intangible assets

95,428

—

Impairment of long lived assets(c)

2,064

—

Other non-recurring expenses(d)

(740

)

1,346

Adjusted EBITDA

$

34,056

$

60,803

(a):

Represents expenses associated with equity incentive instruments granted to our management. 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 impairment of long lived assets related to the change in use of a right-of-use asset.

(d):

Represents items management believes are not indicative of ongoing operating performance. For the thirteen and twenty-six weeks ended August 3, 2019 these expenses are primarily composed of a gain from insurance proceeds and restructuring costs. For the twenty-six weeks ended August 4, 2018, these expenses include costs related to a CEO transition.

J.Jill, Inc.

Reconciliation of GAAP Operating Income to Adjusted Income from Operations

(Unaudited)

(Amounts in thousands)

For the Thirteen Weeks Ended

August 3, 2019

August 4, 2018

Operating (loss) income

$

(94,785

)

$

19,290

Interest expense, net

5,019

4,853

Income tax (benefit) provision

(3,069

)

3,952

Impairment of goodwill and indefinite-lived intangible assets

95,428

—

Impairment of long lived assets(a)

2,064

—

Other non-recurring expenses (b)

(740

)

—

Adjusted Income from Operations

$

3,917

$

28,095

For the Twenty-Six Weeks Ended

August 3, 2019

August 4, 2018

Operating (loss) income

$

(83,974

)

$

39,337

Interest expense, net

10,026

9,670

Income tax (benefit) provision

(1,631

)

7,924

Impairment of goodwill and indefinite-lived intangible assets

95,428

—

Impairment of long lived assets(a)

2,064

—

Accelerated equity-based compensation expense

—

244

Other non-recurring expenses(b)

(740

)

1,346

Adjusted Income from Operations

$

21,173

$

58,521

(a):

Represents impairment of long lived assets related to the change in use of a right-of-use asset.

(b):

Represents items management believes are not indicative of ongoing operating performance. For the thirteen and twenty-six weeks ended August 3, 2019 these expenses are primarily composed of a gain from insurance proceeds and restructuring costs. For the twenty-six weeks ended August 4, 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

August 3, 2019

August 4, 2018

Net (loss) income and total comprehensive (loss) income

$

(96,735

)

$

10,485

Add: Income tax (benefit) provision

(3,069

)

3,952

(Loss) Income before (benefit) provision for income taxes

(99,804

)

14,437

Add: Impairment of goodwill and indefinite-lived intangible assets

95,428

—

Add: Impairment of long-lived assets(a)

2,064

—

Add: Other non-recurring expenses(b)

(740

)

—

Adjusted (loss) income before (benefit) provision for income taxes

(3,052

)

14,437

Less: Adjusted tax (benefit) provision(c)

(824

)

3,754

Adjusted net (loss) income

$

(2,228

)

$

10,683

Adjusted net (loss) income per common share attributable to common shareholders:

Basic

$

(0.05

)

$

0.25

Diluted

$

(0.05

)

$

0.24

Weighted average number of common shares outstanding:

Basic

43,793,348

42,855,366

Diluted

43,793,348

44,716,193

For the Twenty-Six Weeks Ended

August 3, 2019

August 4, 2018

Net (loss) income and total comprehensive (loss) income

$

(92,369

)

$

21,743

Add: Income tax (benefit) provision

(1,631

)

7,924

(Loss) income before (benefit) provision for income taxes

(94,000

)

29,667

Add: Impairment of goodwill and indefinite-lived intangible assets

95,428

—

Add: Impairment of long-lived assets(a)

2,064

—

Add: Other non-recurring expenses(b)

(740

)

1,346

Add: Accelerated equity-based compensation expense

—

244

Adjusted income before provision for income taxes

2,752

31,257

Less: Adjusted tax provision(c)

743

8,127

Adjusted net income

$

2,009

$

23,130

Adjusted net income per common share attributable to common shareholders:

Basic

$

0.05

$

0.54

Diluted

$

0.05

$

0.52

Weighted average number of common shares outstanding:

Basic

43,560,434

42,535,849

Diluted

43,560,434

44,061,804

(a):

Represents impairment of long lived assets related to the change in use of a right-of-use asset.

(b):

Represents items management believes are not indicative of ongoing operating performance. For the thirteen and twenty-six weeks ended August 3, 2019 these expenses are primarily composed of a gain from insurance proceeds and restructuring costs. For the twenty-six weeks ended August 4, 2018, these expenses include costs related to a CEO transition.

(c):

The adjusted tax provision for adjusted net income is estimated by applying a rate of 27% for FY19 and 26% for FY18, to the adjusted income before provision for income taxes.

Investors:

Caitlin Churchill/Joseph Teklits

ICR, Inc.

[email protected]

203-682-8200

Media:

Chris Gayton

J.Jill, Inc.

[email protected]

617-689-7916

Source: J.Jill, Inc.

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