J.Jill Sees Q2 Dips in Sales and Income

Story was updated Aug. 31 at 3:51 p.m.

J.Jill, along with several retailers seeing consumers reduce spending on apparel and other discretionary categories, posted top- and bottom-line declines during the second quarter.

On the positive side, the company raised it forecast for earnings before interest, taxes, depreciation and amortization, cut inventories significantly and was pleased by the response to full-price selling.

Net income at the women’s specialty retailer came to $15.2 million in the quarter ended July 29, compared to $17.8 million in the second quarter of fiscal 2022.

In an interview with WWD, Claire Spofford, president and chief executive officer of J.Jill Inc., said, “We were pleased with the quarter. Obviously, relative to guidance we felt good about results and felt good about the progress in full-price selling. In July it was especially strong and that’s when there is a big sales environment [across retailing]. We felt good about our growth in our customer files, in acquiring customers new to the brand and acquiring customers at the younger end of our target. We feel encouraged as we come into the third quarter.”

Unlike most other retailers, “the second quarter is like our Christmas. Historically, it’s the biggest quarter from a revenue and EBITDA standpoint,” Spofford said. That’s largely due to Mother’s Day and as Spofford said, “Customers love our spring and summer assortments. Our dress business is particularly strong.” She also cited linens.

Overall through the year, EBITDA and sales volumes are pretty balance, quarter to quarter, she said.

She said the company was “marginally more promotional” last quarter, but that the promotions were narrow and shallow and that there was a “real focus on full-price selling and maintaining margins.” Spofford observed that consumers are buying more at full price but purchasing fewer units.

Moving into fall, with the Wearever subbrand, a Wearever Works Capsule, highlighting pieces that are versatile and can be worn from the office to a dinner, will be introduced. Spofford said the capsule has about a dozen silhouettes and is “a bit more polished, elevated and less casual than our core Wearever collection.”

During a conference call with analysts, Spofford said, “While our customer exhibited more hesitancy with her spend early on in the quarter, as we moved into the key summer months, she responded well to our seasonal summer favorites, accessories and novelty items, which were highlighted with trend forward details and a bright and joyful color pallet.

“In addition, in line with our strategy to maintain a disciplined approach to inventory management, we leveraged category-specific promotions that not only drove sales of those items, but spurred an energizing effect across the assortment.”

In her prepared statement, Spofford said, “Despite a slower start to the period given customer concerns with the evolving macro environment, we were pleased with how the quarter evolved with trends improving during the period. In addition, we continued to execute our disciplined operating model and are pleased with our ending inventory position. As we move into the second half of the fiscal year, we remain focused on delivering on our objectives and further strengthening our foundation to deliver long-term success.”

J.Jill also reported that inventory at the end of the second quarter of fiscal 2023 decreased 16 percent to $45.7 million, compared to $54.4 million at the end of the second quarter of fiscal 2022.

For the third quarter of fiscal 2023, the company expects revenues to be down in the low-single digits compared to the third quarter of fiscal 2022, and for adjusted EBITDA to be in the range of $23 million and $25 million.

For fiscal 2023, the company now expects adjusted EBITDA dollars to be down in the low-single digits compared to fiscal 2022, including about a $2 million benefit from the 53rd week. Earlier this year, J.Jill stated that it expected adjusted EBITDA dollars to be down mid-single digits compared to fiscal 2022, including about a $2 million benefit from the 53rd week.