Net Sales of $149.4 Million vs. $157.1
Million in Q1 FY2022; Total Company Comparable Sales Down 2.7% vs.
Q1 FY2022
Operating Income Increase of 6.3% and
Operating Income Margin increase of 180bps vs. Q1 FY2022
Inventory Down 14.9% vs. End of Q1
FY2022
Successfully Completed Debt Refinancing
Transactions
J.Jill, Inc. (NYSE:JILL) today announced financial results for
the first quarter ended April 29, 2023.
Claire Spofford, President and Chief Executive Officer of
J.Jill, Inc. stated, “Our first quarter results demonstrate the
ongoing execution of our disciplined operating model especially as
we anniversaried a strong comparison to last year. Our customer
continues to gravitate to the newness we are flowing regularly in
our assortment, but has become increasingly discerning with her
spending decisions in light of the evolving macro environment. As
we move into the remainder of the year, we will maintain our
disciplined approach to managing the business as we continue to
navigate a dynamic environment.”
For the first quarter ended April 29, 2023:
- Total net sales for the thirteen weeks ended April 29, 2023
were down 4.9% to $149.4 million compared to $157.1 million for the
thirteen weeks ended April 30, 2022.
- Total company comparable sales, which includes comparable store
and direct to consumer sales, decreased by 2.7%.
- Direct to consumer net sales, which represented 45.0% of sales,
were down 7.7% compared to the first quarter of fiscal 2022.
- Gross profit was $107.5 million compared to $109.5 million in
the first quarter of fiscal 2022. Gross margin was 72.0% compared
to 69.7% in the first quarter of fiscal 2022. The year over year
gross margin increase benefited from lower freight costs compared
to the first quarter of fiscal 2022.
- SG&A was $82.1 million compared to $85.6 million in the
first quarter of fiscal 2022. In comparing the first quarter of
fiscal 2023 to fiscal 2022, excluding non-recurring and other
one-time costs, SG&A as a percentage of total net sales was
55.0% compared to 54.6% in the first quarter of fiscal 2022.
- Income from operations was $25.4 million compared to $23.9
million in the first quarter of fiscal 2022. Adjusted Income from
Operations*, which excludes adjustments for costs to exit retail
stores as well as impairment charges was $25.4 million compared to
$23.8 million in the first quarter of fiscal 2022.
- Interest expense was $6.1 million compared to $4.5 million in
the first quarter of fiscal 2022.
- During the first quarter of fiscal 2023, the Company recorded
an income tax provision of $2.0 million compared to $5.0 million in
the first quarter of fiscal 2022 and the effective tax rate was
29.9% compared to 25.8% in the first quarter of fiscal 2022.
- Net income was $4.6 million compared to $14.4 million in the
first quarter of fiscal 2022.
- Net Income per Diluted Share was $0.32 compared to $1.02 in the
first quarter of fiscal 2022 including the impact of non-recurring
items and a $12.7 million Loss on debt refinancing as part of the
Company's Term Loan refinancing in the first quarter of fiscal
2023. Excluding the impact of these items, Adjusted Net Income per
Diluted Share* in the first quarter of fiscal 2023 was $0.96
compared to $1.02 in the first quarter of fiscal 2022. The decrease
in the first quarter of fiscal 2023 was driven by higher interest
expense.
- Adjusted EBITDA* for the first quarter of fiscal 2023 was $31.9
million compared to $31.3 million in the first quarter of fiscal
2022. Adjusted EBITDA margin* for the first quarter of fiscal 2023
was 21.3% compared to 19.9% in the first quarter of fiscal
2022.
- The Company opened 2 new stores in the first quarter of fiscal
2023 and ended the quarter with 245 stores.
Balance Sheet Highlights
- The Company successfully refinanced its funded debt during the
quarter, reducing principal outstanding by approximately $50
million dollars and extending maturity to May 2028.
- The Company ended the first quarter of fiscal 2023 with $27.9
million in cash and $34.2 million of total availability under its
revolving credit agreement.
- Inventory at the end of the first quarter of fiscal 2023
decreased 14.9% to $53.8 million compared to $63.2 million at the
end of the first quarter of fiscal 2022.
*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 second quarter of fiscal 2023, the Company expects
revenues to be down mid-single digits compared to the second
quarter of fiscal 2022, and for Adjusted EBITDA to be in the range
of $26.0 million and $31.0 million.
For fiscal 2023, the Company now expects Annual Adjusted EBITDA
dollars to be down mid-single digits compared to fiscal 2022,
including approximately $2 million benefit from the 53rd week. The
Company continues to expect total capital expenditures of about
$18.0 million and a flat store count to end fiscal 2023.
Conference Call Information
A conference call to discuss first quarter 2023 results is
scheduled for today, June 7, 2023, at 8:00 a.m. Eastern Time. Those
interested in participating in the call are invited to dial (888)
330-3391 or (646) 960-0845 if calling internationally. Please dial
in approximately 10 minutes prior to the start of the call and
reference Conference ID 2289963 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) 770-2030 or (647) 362-9199. The pin
number to access the telephone replay is 2289963. The telephone
replay will be available until Wednesday, June 14, 2023.
About J.Jill, Inc.
J.Jill is a national lifestyle brand that provides apparel,
footwear and accessories designed to help its customers move
through a full life with ease. The brand represents an easy,
thoughtful, and inspired style that celebrates the totality of all
women and designs its products with its core brand ethos in mind:
keep it simple and make it matter. J.Jill offers a high touch
customer experience through over 200 stores nationwide and a robust
ecommerce 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. We also use Adjusted EBITDA margin
which represents, for any period, Adjusted EBITDA as a percentage
of net sales.
- 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 Net Income per Diluted 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 EBITDA margin,
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 EBITDA margin, 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), Income (Loss) from Operations
or Net Income (Loss) per Diluted Share, which are calculated in
accordance with GAAP. In addition, other companies, including
companies in our industry, may calculate Adjusted EBITDA, Adjusted
EBITDA margin, 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 EBITDA
margin, Adjusted Income (Loss) from Operations, Adjusted Net Income
(Loss) and Adjusted Diluted EPS to Net Income (Loss), Income (Loss)
from Operations and Net Income (Loss) per Diluted Share, the most
directly comparable GAAP financial measures, under “Reconciliation
of GAAP Net Income (Loss) to Adjusted EBITDA,” “Reconciliation of
GAAP Operating Income to Adjusted Income from Operations” and
“Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income”
and not rely solely on Adjusted EBITDA, Adjusted EBITDA margin,
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.” All statements that address activities, events or
developments that we intend, expect or believe may occur in the
future are forward-looking statements, including, among others,
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,” “goal,” “target” (although not all
forward-looking statements contain these identifying words) 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 inherently subject to a number of risks,
uncertainties, potentially inaccurate assumptions 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: (1) our ability to successfully expand and increase
sales, including by opening new retail stores on a profitable
basis, to maintain and enhance a strong brand image, and to
optimize our omnichannel operations; (2) changes in consumer
confidence, preference and spending, and our ability to adapt to
such changes; (3) the competitive environment we operate in; (4)
post-pandemic changes in consumer behavior and the timeline of
overall economic recovery; (5) our level of indebtedness and
ability to work with lenders to pursue options to refinance; and
(6) other factors that may be described in our filings with the
Securities and Exchange Commission (the “SEC”), including the
factors set forth under “Risk Factors” in our Annual Report on Form
10-K for the fiscal year ended January 28, 2023. You are encouraged
to read our filings with the SEC, available at www.sec.gov, for a
discussion of these and other risks and uncertainties. We caution
investors, potential investors and others not to place considerable
reliance on the forward-looking statements in this press release
and in the oral statements made by our representatives. Any such
forward-looking statement 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
April 29, 2023
April 30, 2022
Net sales
$
149,420
$
157,069
Costs of goods sold
41,880
47,606
Gross profit
107,540
109,463
Selling, general and administrative
expenses
82,146
85,578
Operating income
25,394
23,885
Loss on debt refinancing
12,702
—
Interest expense, net
5,057
3,658
Interest expense, net - related party
1,074
802
Income before provision for income
taxes
6,561
19,425
Income tax provision
1,965
5,010
Net income and total comprehensive
income
$
4,596
$
14,415
Net income per common share attributable
to common shareholders
Basic
$
0.32
$
1.04
Diluted
$
0.32
$
1.02
Weighted average number of common shares
outstanding
Basic
14,250,811
13,874,546
Diluted
14,510,008
14,171,082
J.Jill, Inc.
Consolidated Balance Sheets (Unaudited) (Amounts
in thousands, except common share data)
April 29, 2023
January 28, 2023
Assets
Current assets:
Cash and cash equivalents
$
27,891
$
87,053
Accounts receivable
8,153
7,039
Inventories, net
53,788
50,585
Prepaid expenses and other current
assets
17,313
16,143
Total current assets
107,145
160,820
Property and equipment, net
53,791
53,497
Intangible assets, net
71,452
73,188
Goodwill
59,697
59,697
Operating lease assets, net
115,564
119,118
Other assets
318
97
Total assets
$
407,967
$
466,417
Liabilities and Shareholders’ Equity
(Deficit)
Current liabilities:
Accounts payable
$
41,858
$
39,306
Accrued expenses and other current
liabilities
38,846
49,730
Current portion of long-term debt
8,750
3,424
Current portion of operating lease
liabilities
34,160
34,527
Total current liabilities
123,614
126,987
Long-term debt, net of discount and
current portion
151,787
195,517
Long-term debt, net of discount and
current portion - related party
—
9,719
Deferred income taxes
9,956
10,059
Operating lease liabilities, net of
current portion
118,361
123,101
Other liabilities
924
1,253
Total liabilities
404,642
466,636
Commitments and contingencies
Shareholders’ Equity (Deficit)
Common stock, par value $0.01 per share;
50,000,000 shares authorized; 10,580,802 and 10,165,361 shares
issued and outstanding at April 29, 2023 and January 28, 2023,
respectively
107
102
Additional paid-in capital
210,948
212,005
Accumulated deficit
(207,730
)
(212,326
)
Total shareholders’ equity (deficit)
3,325
(219
)
Total liabilities and shareholders’ equity
(deficit)
$
407,967
$
466,417
J.Jill, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(Unaudited) (Amounts in thousands)
For the Thirteen Weeks
Ended
April 29, 2023
April 30, 2022
Net income
$
4,596
$
14,415
Interest expense, net
5,057
3,658
Interest expense, net - related party
1,074
802
Income tax provision
1,965
5,010
Depreciation and amortization
5,571
6,713
Equity-based compensation expense (a)
878
742
Write-off of property and equipment
(b)
20
92
Adjustment for costs to exit retail stores
(c)
—
(243
)
Loss on debt refinancing (d)
12,702
—
Impairment of long-lived assets (e)
—
108
Adjusted EBITDA
$
31,863
$
31,297
Net sales
$
149,420
$
157,069
Adjusted EBITDA margin
21.3
%
19.9
%
(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 grant.
(b)
Represents the net gain or loss on the
disposal of fixed assets.
(c)
Represents non-cash adjustments associated
with exiting store leases earlier than anticipated.
(d)
Represents loss on the repayment of
Priming Term Loan Credit Agreement and the Subordinated Term Loan
Credit Agreement.
(e)
Represents impairment of long-lived assets
related to leasehold improvements.
J.Jill, Inc.
Reconciliation of GAAP Operating Income to Adjusted Income from
Operations (Unaudited) (Amounts in thousands)
For the Thirteen Weeks
Ended
April 29, 2023
April 30, 2022
Operating income
$
25,394
$
23,885
Adjustment for costs to exit retail stores
(a)
—
(243
)
Impairment of long-lived assets (b)
—
108
Adjusted income from operations
$
25,394
$
23,750
(a)
Represents non-cash adjustments associated
with exiting store leases earlier than anticipated.
(b)
Represents impairment of long-lived assets
related to leasehold improvements.
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
April 29, 2023
April 30, 2022
Net income and total comprehensive
income
$
4,596
$
14,415
Add: Income tax provision
1,965
5,010
Income before provision for income tax
6,561
19,425
Add: Adjustment for costs to exit retail
stores (a)
—
(243
)
Add: Loss on debt refinancing (b)
12,702
—
Add: Impairment of long-lived assets
(c)
—
108
Adjusted income before income tax
provision
19,263
19,290
Less: Adjusted tax provision (d)
5,374
4,900
Adjusted net income
$
13,889
$
14,390
Adjusted net income per share attributable
to common shareholders
Basic
$
0.97
$
1.04
Diluted
$
0.96
$
1.02
Weighted average number of common
shares
Basic
14,250,811
13,874,546
Diluted
14,510,008
14,171,082
(a)
Represents non-cash adjustments associated
with exiting store leases earlier than anticipated.
(b)
Represents loss on the repayment of
Priming Term Loan Credit Agreement and the Subordinated Term Loan
Credit Agreement.
(c)
Represents impairment of long-lived assets
related to leasehold improvements.
(d)
The adjusted tax provision for adjusted
net income is estimated by applying a rate of 27.9% for the first
quarter of fiscal 2023 and 25.4% for the first quarter of fiscal
2022 to the adjusted net income before income tax provision.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230607005247/en/
Investor Relations: Caitlin Churchill ICR, Inc.
investors@jjill.com 203-682-8200 Business and Financial
Media: Ariel Kouvaras Sloane & Company
akouvaras@sloanepr.com 973-897-6241 Brand Media: Meredith
Schwenk J.Jill, Inc. media@jjill.com 617-376-4399
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