Core Insights - The article emphasizes the investment philosophy focused on small cap companies, highlighting the importance of identifying mispriced securities through understanding financial drivers and utilizing DCF model valuation [1] Group 1 - The investment strategy is not confined to traditional categories such as value, dividend, or growth investing, but rather considers all prospects of a stock to assess risk-to-reward [1]

Group 1 - The investment strategy focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective [1] - The approach does not prioritize market-driven dynamics or future price action, instead emphasizing the long-term earnings potential of companies [1] - The majority of recommendations will be holds, indicating a cautious approach to market conditions and a belief that only a small fraction of companies are suitable for buying at any given time [1] Group 2 - The articles aim to provide valuable information for future investors while maintaining a healthy skepticism towards a generally bullish market [1] - The author expresses no current stock or derivative positions in the companies mentioned, ensuring an unbiased perspective [2] - The content reflects the author's personal opinions and is not influenced by any business relationships with the companies discussed [2]

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements and comprehensive accounting notes [Condensed Consolidated Balance Sheets](index=4&type=page&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | August 2, 2025 | February 1, 2025 | | :-------------------------------- | :------------- | :--------------- | | Cash and cash equivalents | $45,523 | $35,427 | | Inventories, net | $55,268 | $61,295 | | Total current assets | $130,359 | $122,030 | | Total assets | $436,508 | $417,699 | | Total current liabilities | $117,164 | $127,108 | | Long-term debt, net | $70,016 | $69,419 | | Total liabilities | $315,007 | $311,930 | | Total shareholders' equity | $121,501 | $105,769 | - Total assets increased by **$18,800 thousand** from **February 1, 2025**, to **August 2, 2025**, primarily driven by an increase in cash and cash equivalents and operating lease assets[9](index=9&type=chunk) - Shareholders' equity increased by **$15,700 thousand**, from **$105,800 thousand** to **$121,500 thousand**, reflecting net income and other equity activities[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income](index=5&type=page&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Details the company's financial performance, including net sales, gross profit, operating income, and net income Condensed Consolidated Statements of Operations and Comprehensive Income (in thousands, except per share data) | Metric | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :--------------------------------- | | Net sales | $153,987 | $155,242 | $307,611 | $316,755 | | Gross profit | $105,357 | $109,394 | $215,714 | $227,131 | | Operating income | $16,783 | $23,022 | $35,845 | $51,394 | | Net income | $10,515 | $8,191 | $22,207 | $24,887 | | Basic EPS | $0.69 | $0.55 | $1.45 | $1.71 | | Diluted EPS | $0.69 | $0.54 | $1.45 | $1.69 | | Cash dividends declared per share | $0.08 | $0.07 | $0.16 | $0.07 | - Net sales decreased by **0.8%** for the thirteen weeks and **2.9%** for the twenty-six weeks ended **August 2, 2025**, compared to the prior year periods[12](index=12&type=chunk) - Net income increased by **28.4%** for the thirteen weeks ended **August 2, 2025**, but decreased by **10.8%** for the twenty-six weeks ended **August 2, 2025**, primarily due to the absence of a loss on extinguishment of debt in the current year period[12](index=12&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=page&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Outlines changes in the company's equity, including common stock, additional paid-in capital, treasury stock, and accumulated deficit Changes in Shareholders' Equity (in thousands) | Item | Balance, Feb 1, 2025 | Balance, Aug 2, 2025 | | :-------------------------------- | :------------------- | :------------------- | | Common Stock (Amount) | $153 | $157 | | Additional Paid-in Capital | $242,781 | $240,830 | | Treasury Stock (Amount) | $(523) | $(5,051) | | Accumulated Deficit | $(136,642) | $(114,435) | | Total Shareholders' Equity | $105,769 | $121,501 | - Shareholders' equity increased from **$105,800 thousand** at **February 1, 2025**, to **$121,500 thousand** at **August 2, 2025**, driven by net income and partially offset by share repurchases and dividends[14](index=14&type=chunk) - The company repurchased 255,240 shares for **$4,500 thousand** during the twenty-six weeks ended **August 2, 2025**, increasing treasury stock[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=page&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash provided by operating activities | $24,698 | $37,880 | | Net cash used in investing activities | $(5,476) | $(4,560) | | Net cash used in financing activities | $(9,126) | $(67,026) | | Net change in cash and cash equivalents | $10,096 | $(33,706) | | Cash and cash equivalents, End of Period | $45,886 | $28,834 | - Net cash provided by operating activities decreased by **$13,200 thousand** for the twenty-six weeks ended **August 2, 2025**, primarily due to lower net income and changes in operating assets and liabilities[15](index=15&type=chunk)[161](index=161&type=chunk) - Net cash used in financing activities significantly decreased from **$67,000 thousand** in the prior year to **$9,100 thousand**, mainly due to the absence of large Term Loan prepayments and common stock issuance in the current period[15](index=15&type=chunk)[165](index=165&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=page&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed notes on accounting policies, revenue, assets, debt, and other financial disclosures [1. Description of Business](index=8&type=page&id=1.%20Description%20of%20Business) Describes the company's core business, brand, and operational channels - J.Jill, Inc. is a national lifestyle brand offering apparel, footwear, and accessories through **247 stores** nationwide and an e-commerce platform[18](index=18&type=chunk) [2. Summary of Significant Accounting Policies](index=8&type=page&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and methodologies applied in preparing the financial statements - The company adopted ASU 2023-07, 'Segment Reporting: Improvements to Reportable Segment Disclosures,' in **Q4 Fiscal Year 2024**[22](index=22&type=chunk)[37](index=37&type=chunk) Cash, Cash Equivalents, and Restricted Cash Reconciliation (in thousands) | Item | August 2, 2025 | August 3, 2024 | | :---------------------------------------------------------------- | :------------- | :------------- | | Cash and cash equivalents | $45,523 | $28,466 | | Restricted cash reported in Prepaid expenses and other current assets | $363 | $368 | | Total cash, cash equivalents, and restricted cash | $45,886 | $28,834 | - Effective **March 2025**, the company revised its methodology for estimating the Direct sales returns reserve, transitioning to a curve-based model and reducing the allowable return window from **90 to 60 days**[33](index=33&type=chunk) [3. Revenues](index=12&type=page&id=3.%20Revenues) Details the company's revenue recognition policies and disaggregated net sales by channel Disaggregated Net Sales by Channel (in thousands) | Channel | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :------ | :------------------------------- | :------------------------------- | :--------------------------------- | :--------------------------------- | | Retail | $82,492 | $82,148 | $164,305 | $167,755 | | Direct | $71,495 | $73,094 | $143,306 | $149,000 | | Net sales | $153,987 | $155,242 | $307,611 | $316,755 | - Direct channel net sales decreased for both the thirteen-week and twenty-six-week periods year-over-year[38](index=38&type=chunk) Contract Liabilities (in thousands) | Item | August 2, 2025 | February 1, 2025 | | :---------------- | :------------- | :--------------- | | Upfront payment | $446 | $486 | | Unredeemed gift cards | $5,778 | $7,003 | | Total contract liabilities | $6,224 | $7,489 | [4. Asset Impairments](index=14&type=page&id=4.%20Asset%20Impairments) Discusses the company's policies and charges related to the impairment of long-lived assets and goodwill - The company recorded **$200 thousand** in noncash impairment charges for long-lived assets (leasehold improvements) for the twenty-six weeks ended **August 2, 2025**, down from **$300 thousand** in the prior year[45](index=45&type=chunk)[46](index=46&type=chunk) - Goodwill balance remained at **$59,700 thousand** as of **August 2, 2025**, with accumulated impairment losses of **$137,300 thousand**[47](index=47&type=chunk) Intangible Assets (in thousands) | Asset Type | August 2, 2025 Carrying Amount | February 1, 2025 Carrying Amount | | :-------------------- | :----------------------------- | :------------------------------- | | Trade name | $34,000 | $34,000 | | Customer relationships | $24,669 | $27,015 | | Total intangible assets | $58,669 | $61,015 | [5. Debt](index=16&type=page&id=5.%20Debt) Provides information on the company's long-term debt, credit facilities, and related financial covenants Long-Term Debt (in thousands) | Debt Type | August 2, 2025 Balance Sheet | February 1, 2025 Balance Sheet | | :-------------------------- | :--------------------------- | :----------------------------- | | Net long-term debt (Term Loan) | $70,016 | $69,419 | - The company made voluntary principal prepayments totaling **$85,400 thousand** on the Term Loan Credit Agreement in Fiscal Year 2024, resulting in a **$8,600 thousand** loss on extinguishment of debt[55](index=55&type=chunk)[56](index=56&type=chunk) - As of **August 2, 2025**, the remaining Term Loan principal balance is **$74,300 thousand**, due at maturity on **May 8, 2028**, with no further quarterly payments required[56](index=56&type=chunk) - The company had **$35,700 thousand** in available borrowing capacity under its $40.0 million ABL Facility as of **August 2, 2025**, with **$4,300 thousand** outstanding in letters of credit[59](index=59&type=chunk) [6. Fair Value Measurements](index=17&type=page&id=6.%20Fair%20Value%20Measurements) Explains the methodologies and inputs used to determine the fair value of financial instruments Fair Value of Debt (in thousands) | Metric | August 2, 2025 Carrying Value | August 2, 2025 Fair Value (Level 2) | | :-------------------------------- | :---------------------------- | :---------------------------------- | | Total debt | $70,016 | $73,194 | | | | | | Metric | February 1, 2025 Carrying Value | February 1, 2025 Fair Value (Level 2) | | :-------------------------------- | :---------------------------- | :---------------------------------- | | Total debt | $69,419 | $73,968 | - The fair value of debt instruments is obtained based on observable market prices for similar instruments (Level 2 inputs)[64](index=64&type=chunk) - Other financial instruments like cash, accounts receivable, and accounts payable approximate fair value due to their short-term maturities[65](index=65&type=chunk) [7. Income Taxes](index=19&type=page&id=7.%20Income%20Taxes) Presents the company's income tax provision, effective tax rates, and significant tax-related considerations Income Tax Provision and Effective Tax Rates | Period | Income Tax Provision (in thousands) | Effective Tax Rate | | :-------------------------------- | :-------------------------------- | :----------------- | | Thirteen Weeks Ended Aug 2, 2025 | $4,033 | **27.7%** | | Thirteen Weeks Ended Aug 3, 2024 | $3,075 | **27.3%** | | Twenty-Six Weeks Ended Aug 2, 2025 | $9,002 | **28.8%** | | Twenty-Six Weeks Ended Aug 3, 2024 | $9,303 | **27.2%** | - The effective tax rates for both periods differ from the federal statutory rate of **21%** primarily due to state and local income taxes and executive compensation limitations[70](index=70&type=chunk) - The estimated impact of the One Big Beautiful Bill Act (OBBBA), enacted **July 4, 2025**, which includes accelerated cost recovery and immediate expensing of R&D costs, has been recognized as immaterial[71](index=71&type=chunk) [8. Shareholders' Equity](index=21&type=page&id=8.%20Shareholders'%20Equity) Details changes in shareholders' equity, including stock issuance, repurchases, and dividend declarations - In **June 2024**, the company issued and sold 1,000,000 shares of common stock at **$31.00 per share**, generating net proceeds of **$29,500 thousand**, which were used for debt repayment and general corporate purposes[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - The Board approved a **$25,000 thousand** share repurchase program in **December 2024**. As of **August 2, 2025**, the company repurchased 255,240 shares for **$4,500 thousand**, with **$20,000 thousand** remaining authorization[76](index=76&type=chunk)[77](index=77&type=chunk) - The company declared quarterly cash dividends of **$0.08 per share** for the thirteen weeks ended **August 2, 2025**, and intends to continue quarterly dividends subject to market conditions and Board discretion[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) [9. Net Income Per Share](index=23&type=page&id=9.%20Net%20Income%20Per%20Share) Calculates and presents basic and diluted net income per common share for the reported periods Net Income Per Common Share (in thousands, except per share data) | Metric | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :--------------------------------- | | Net income | $10,515 | $8,191 | $22,207 | $24,887 | | Weighted average common shares, basic | 15,254,411 | 14,906,662 | 15,284,442 | 14,581,796 | | Weighted average common shares, diluted | 15,297,083 | 15,098,301 | 15,344,019 | 14,746,749 | | Basic EPS | **$0.69** | **$0.55** | **$1.45** | **$1.71** | | Diluted EPS | **$0.69** | **$0.54** | **$1.45** | **$1.69** | - Basic EPS increased to **$0.69** for the thirteen weeks ended **August 2, 2025**, from **$0.55** in the prior year, but decreased to **$1.45** for the twenty-six weeks from **$1.71**[82](index=82&type=chunk) - Certain share-based awards were excluded from diluted EPS calculations due to their antidilutive effect[82](index=82&type=chunk) [10. Share-Based Payment](index=23&type=page&id=10.%20Share-Based%20Payment) Describes the company's share-based compensation plans and related accounting treatment - The Amended and Restated 2027 Omnibus Incentive Plan (A&R Plan) has 2,793,453 shares reserved for issuance, with 1,187,158 shares remaining for future issuance as of **August 2, 2025**[85](index=85&type=chunk) RSU Awards Activity (Twenty-Six Weeks Ended August 2, 2025) | Item | Number of RSUs | Weighted Average Grant Date Fair Value | | :-------------------------------- | :------------- | :------------------------------------- | | Unvested units outstanding at Feb 1, 2025 | 479,888 | $23.66 | | Granted | 427,832 | $15.84 | | Vested | (259,588) | $18.80 | | Forfeited | (60,590) | $26.46 | | Unvested units outstanding at Aug 2, 2025 | 587,542 | $19.89 | - As of **August 2, 2025**, total unrecognized compensation expense for unvested RSUs was **$9,600 thousand** (weighted-average service period of **1.9 years**) and for unvested PSUs was **$1,600 thousand** (weighted-average service period of **1.8 years**)[88](index=88&type=chunk)[92](index=92&type=chunk) [11. Related Party Transactions](index=27&type=page&id=11.%20Related%20Party%20Transactions) Discloses transactions and relationships with related parties, including significant stockholders and affiliates - TowerBrook Capital Partners, LP, the company's largest stockholder, no longer controls a majority of voting power, thus J.Jill no longer qualifies as a 'controlled company' under NYSE standards[97](index=97&type=chunk) - The company incurred **$400 thousand** in costs under a consulting agreement with Elm St Advisors, LLC, a related party, during the twenty-six weeks ended **August 2, 2025**[99](index=99&type=chunk) [12. Commitments and Contingencies](index=28&type=page&id=12.%20Commitments%20and%20Contingencies) Outlines the company's contractual commitments and potential contingent liabilities from legal proceedings - The company is subject to various legal proceedings in the ordinary course of business and establishes reserves for probable and estimable losses[100](index=100&type=chunk) [13. Segment Reporting](index=28&type=page&id=13.%20Segment%20Reporting) Provides financial information by operating segment and explains the basis for segment aggregation - The company operates through two operating segments, Retail and Direct, which are aggregated into a single reportable segment due to similar economic characteristics and shared resources[101](index=101&type=chunk) - The Chief Executive Officer (CODM) primarily uses net income to assess performance, analyze shopping behaviors, and allocate resources[102](index=102&type=chunk) Segment Financial Information (in thousands) | Metric | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :--------------------------------- | | Net sales | $153,987 | $155,242 | $307,611 | $316,755 | | Costs of goods sold | $48,630 | $45,848 | $91,897 | $89,624 | | Selling expenses | $48,794 | $46,694 | $96,568 | $91,804 | | Marketing expenses | $12,097 | $11,794 | $26,336 | $26,141 | | General and administrative expenses | $18,877 | $20,719 | $39,886 | $41,836 | | Net income | $10,515 | $8,191 | $22,207 | $24,887 | [Geographic Information](index=28&type=page&id=Geographic%20Information) Details the geographic distribution of the company's assets and sales activities - All of the company's identifiable assets are located in the United States, and sales outside the U.S. are immaterial[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, discussing key factors affecting performance, how performance is assessed, detailed comparisons of financial results for the thirteen and twenty-six weeks ended August 2, 2025, liquidity and capital resources, critical accounting policies, and forward-looking statements [Overview](index=29&type=page&id=Overview) Provides a general introduction to the company's business, brand, and operational structure - J.Jill is a national lifestyle brand offering apparel, footwear, and accessories through **247 stores** and an e-commerce platform, headquartered outside Boston[108](index=108&type=chunk) [Factors Affecting Our Operating Results](index=29&type=page&id=Factors%20Affecting%20Our%20Operating%20Results) Discusses key external and internal factors influencing the company's financial performance and operational outcomes - Operating results are influenced by overall economic trends (consumer confidence, inflation), consumer preferences and fashion trends, intense retail competition, and the success of strategic initiatives like e-commerce and information system upgrades[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - Pricing, merchandise mix, supply chain issues, and potential changes in tax laws or tariffs (especially on imported goods) also significantly impact financial performance[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) [How We Assess the Performance of Our Business](index=30&type=page&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) Explains the key financial and operational metrics used by management to evaluate business performance - Key performance metrics include Net sales (impacted by customer base, product assortment, marketing, and omnichannel migration), Total company comparable sales (excluding new store openings/closures), Number of stores, Gross profit, Costs of goods sold (COGS), Selling, general and administrative (SG&A) expenses, and Adjusted EBITDA[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) - Adjusted EBITDA is a non-GAAP measure used by management to assess operating performance, for planning and forecasting, and for evaluating actual results against expectations[125](index=125&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :--------------------------------- | | Net income | $10,515 | $8,191 | $22,207 | $24,887 | | Adjusted EBITDA | $25,589 | $30,187 | $52,924 | $65,834 | | Adjusted EBITDA margin | **16.6%** | **19.4%** | **17.2%** | **20.8%** | [Results of Operations](index=33&type=page&id=Results%20of%20Operations) Analyzes the company's financial performance for the reported periods, comparing current results to prior periods [Thirteen weeks ended August 2, 2025 Compared to Thirteen weeks ended August 3, 2024](index=33&type=page&id=Thirteen%20weeks%20ended%20August%202,%202025%20Compared%20to%20Thirteen%20weeks%20ended%20August%203,%202024) Compares the company's financial performance for the thirteen-week periods, highlighting key changes and drivers Thirteen Weeks Financial Performance (in thousands) | Metric | Aug 2, 2025 | Aug 3, 2024 | $ Change | % Change | | :-------------------------------- | :---------- | :---------- | :------- | :------- | | Net sales | $153,987 | $155,242 | $(1,255) | (0.8)% | | Gross profit | $105,357 | $109,394 | $(4,037) | (3.7)% | | Selling, general and administrative expenses | $88,569 | $86,314 | $2,255 | 2.6% | | Operating income | $16,783 | $23,022 | $(6,239) | (27.1)% | | Net income | $10,515 | $8,191 | $2,324 | 28.4% | - Net sales decreased by **0.8%** due to a **1.0%** decline in total company comparable sales, driven by a higher markdown mix and increased promotional activities[131](index=131&type=chunk) - Gross margin decreased to **68.4%** from **70.5%** due to a higher mix of markdown sales, higher full-price promotional rates, and increased tariffs[133](index=133&type=chunk) - SG&A expenses increased by $2.3 million (**2.6%**), primarily due to higher outbound shipping costs, CEO transition costs, occupancy costs, and information systems costs, partially offset by lower compensation expenses[134](index=134&type=chunk) [Twenty-Six weeks ended August 2, 2025 Compared to Twenty-Six weeks ended August 3, 2024](index=34&type=page&id=Twenty-Six%20weeks%20ended%20August%202,%202025%20Compared%20to%20Twenty-Six%20weeks%20ended%20August%203,%202024) Compares the company's financial performance for the twenty-six-week periods, highlighting key changes and drivers Twenty-Six Weeks Financial Performance (in thousands) | Metric | Aug 2, 2025 | Aug 3, 2024 | $ Change | % Change | | :-------------------------------- | :---------- | :---------- | :------- | :------- | | Net sales | $307,611 | $316,755 | $(9,144) | (2.9)% | | Gross profit | $215,714 | $227,131 | $(11,417)| (5.0)% | | Selling, general and administrative expenses | $179,657 | $175,426 | $4,231 | 2.4% | | Operating income | $35,845 | $51,394 | $(15,549)| (30.3)% | | Net income | $22,207 | $24,887 | $(2,680) | (10.8)% | | Interest expense | $5,522 | $10,160 | $(4,638) | (45.6)% | - Net sales decreased by **2.9%** due to a **3.5%** decrease in total company comparable sales, driven by a decline in full-price mix and increased promotional activities[143](index=143&type=chunk) - Gross margin decreased to **70.1%** from **71.7%** due to a higher mix of markdown sales, higher full-price promotional rates, and increased tariffs[145](index=145&type=chunk) - Interest expense decreased significantly by **45.6%** due to a lower debt balance following voluntary prepayments on the Term Loan Credit Agreement[150](index=150&type=chunk) [Liquidity and Capital Resources](index=35&type=page&id=Liquidity%20and%20Capital%20Resources) Examines the company's ability to generate and manage cash, including sources of liquidity and capital allocation strategies - Primary liquidity sources are cash and cash equivalents from operating activities and availability under the ABL Facility. As of **August 2, 2025**, the company had **$45,500 thousand** in cash and **$35,700 thousand** available under its $40.0 million ABL Facility[153](index=153&type=chunk) - The company believes its liquidity is sufficient to meet business needs, make voluntary prepayments, pay dividends, and repurchase shares for the next 12 months and foreseeable future[155](index=155&type=chunk) Cash Flow Summary (in thousands) | Activity | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash provided by operating activities | $24,698 | $37,880 | | Net cash used in investing activities | $(5,476) | $(4,560) | | Net cash used in financing activities | $(9,126) | $(67,026) | - Net cash provided by operating activities decreased by **$13,200 thousand**, primarily due to lower net income and changes in operating assets and liabilities, including a decrease in accounts payable and accrued expenses[161](index=161&type=chunk) - Net cash used in financing activities significantly decreased due to the absence of large Term Loan prepayments and common stock issuance seen in the prior year, with current period uses primarily for share repurchases and dividends[165](index=165&type=chunk) [Critical Accounting Policies and Significant Estimates](index=39&type=page&id=Critical%20Accounting%20Policies%20and%20Significant%20Estimates) Highlights accounting policies and estimates requiring significant judgment and impacting financial reporting - Key accounting estimates involve revenue recognition (gift card breakage, merchandise returns), inventory valuation, impairment assessments for goodwill and long-lived assets, and estimating incurred but not reported (IBNR) claims[173](index=173&type=chunk) - Effective **March 2025**, the company revised its methodology for estimating the Direct sales returns reserve, transitioning to a curve-based model and reducing the allowable return window[174](index=174&type=chunk) - No significant changes to critical accounting policies and estimates were reported as of the filing date, other than the change in the direct returns reserve methodology[175](index=175&type=chunk) [Special Note Regarding Forward-Looking Statements](index=39&type=page&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) Provides a cautionary statement about forward-looking information and inherent risks and uncertainties - The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other important factors that may cause actual results to differ materially[176](index=176&type=chunk)[177](index=177&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which reflect views only as of the report date, and the company undertakes no obligation to update them[178](index=178&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the company's exposure to market risk during the second quarter of Fiscal Year 2025 - No material changes in market risk exposure occurred during the second quarter of Fiscal Year 2025[179](index=179&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal control over financial reporting during the second quarter of Fiscal Year 2025 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of **August 2, 2025**[180](index=180&type=chunk)[181](index=181&type=chunk) - No changes to the company's internal control over financial reporting occurred during the second quarter of Fiscal Year 2025 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[182](index=182&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 of the condensed consolidated financial statements for information regarding legal proceedings - Information on legal proceedings as of **August 2, 2025**, is provided in Note 12. Commitments and Contingencies[184](index=184&type=chunk) [Item 1A. Risk Factors](index=41&type=page&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report - No material changes to the risk factors previously disclosed in the 2024 Annual Report have occurred as of the date of this Quarterly Report[185](index=185&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activity during the thirteen weeks ended August 2, 2025 Share Repurchase Activity (Thirteen Weeks Ended August 2, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value Remaining Under Program | | :------------------------ | :----------------------------- | :--------------------------- | :----------------------------------------------- | | May 4, 2025 - May 31, 2025 | — | $— | $20,957,463 | | June 1, 2025 - July 5, 2025 | 57,000 | $14.42 | $20,135,478 | | July 6, 2025 - August 2, 2025 | 11,440 | $15.56 | $19,957,496 | | Total | 68,440 | | | - As of **August 2, 2025**, the company had **$20,000 thousand** of availability remaining under its **$25,000 thousand** share repurchase authorization[186](index=186&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities - There were no defaults upon senior securities[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[189](index=189&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) This section reports that no director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated any Rule 10b5-1(c) trading arrangements during the quarter ended **August 2, 2025**[190](index=190&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report, including certificates of incorporation, bylaws, certifications, and XBRL documents - The exhibit index includes Certificate of Incorporation, Bylaws, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents[191](index=191&type=chunk)[192](index=192&type=chunk)[194](index=194&type=chunk) [Signatures](index=43&type=section&id=Signatures) This section contains the signatures of the authorized officers, certifying the filing of the report - The report is signed by Mary Ellen Coyne, Chief Executive Officer, President and Director, and Mark Webb, Executive Vice President, Chief Financial and Operating Officer, on **September 3, 2025**[198](index=198&type=chunk)

Financial Data and Key Metrics Changes - Total company sales for Q2 2025 were approximately $154 million, down 0.8% compared to Q2 2024 [11] - Adjusted EBITDA for the quarter was $25.6 million, compared to $30.2 million in Q2 2024 [13] - Gross margin for Q2 was 68.4%, down about 210 basis points from Q2 2024, primarily due to a higher mix of markdown sales and increased promotional rates [12][13] - Adjusted net income per diluted share was $0.81, down from $1.05 in the previous year [13] Business Line Data and Key Metrics Changes - Store sales for Q2 increased by 0.4% compared to Q2 2024, driven by three net new stores [12] - Direct sales, representing about 46% of total sales, decreased by approximately 2% compared to Q2 2024 [12] Market Data and Key Metrics Changes - The company experienced improved sales trends month over month during Q2, particularly in June and July, attributed to clearance activities and positive customer response to promotions [11][23] - The company ended Q2 with clean inventories, having successfully cleared excess inventory units [15] Company Strategy and Development Direction - The company aims to expand its customer file by attracting new customers, re-engaging previous shoppers, and delighting existing loyal customers [4] - Focus areas include evolving product assortment, enhancing the customer journey, and improving operational efficiency through technology [5][8] - The company plans to open 50 stores by the end of 2029, with two new stores expected to open toward the end of Q3 2025 [8][18] Management's Comments on Operating Environment and Future Outlook - The management acknowledged a dynamic and uncertain environment, particularly regarding inflation and tariffs, and emphasized the importance of strong vendor relationships [10] - For Q3 2025, the company expects adjusted EBITDA to be in the range of $18 to $22 million, with sales anticipated to be flat to down low single digits [17] - The management expressed optimism about the consumer's gradual return and the potential for growth in the second half of the year [42] Other Important Information - The company generated $17 million of free cash flow in Q2, resulting in an ending cash balance of $46 million [11] - Capital expenditures for the quarter were approximately $3 million, focused on store improvements and the launch of ship-from-store capabilities [15] Q&A Session Summary Question: What drove the improvement in June and July? - The improvement was driven by clearance activities and a good customer response to promotions, particularly in July [23] Question: How should we think about the annualized tariff impact next year? - The annualized portion of the tariff impact is expected to be closer to $20 million, with ongoing efforts to mitigate this through vendor negotiations and strategic pricing [24] Question: Do you expect promotional levels to be in line or elevated versus last year in the second half? - The promotional levels will depend on consumer acceptance of price increases, with a range of outcomes anticipated [26][43] Question: Where do you see opportunities for change and innovation? - Opportunities include refining the marketing mix to attract more customers and enhancing the customer journey [34] Question: What are your thoughts on the state of your consumer? - The consumer is slowly returning, with optimism for Q3 as tariff concerns settle [42]

Financial Data and Key Metrics Changes - Total company sales for Q2 2025 were approximately $154 million, down 0.8% compared to Q2 2024, with comparable sales down 1% [10][11] - Adjusted EBITDA for the quarter was $25.6 million, compared to $30.2 million in Q2 2024 [12] - Gross profit for Q2 was about $105 million, down approximately $4 million from Q2 2024, with a gross margin of 68.4%, down 210 basis points year-over-year [11][12] - Adjusted net income per diluted share was $0.81, compared to $1.05 last year [12] Business Line Data and Key Metrics Changes - Store sales increased by 0.4% compared to Q2 2024, driven by three net new stores [11] - Direct sales, representing about 46% of total sales, decreased by approximately 2% compared to Q2 2024 [11] Market Data and Key Metrics Changes - The company experienced improved sales trends month-over-month in Q2, particularly in June and July, attributed to clearance activities and promotional efforts [10][23] - The company ended the quarter with clean inventories, having successfully cleared excess inventory units [15] Company Strategy and Development Direction - The company aims to expand its customer base by evolving product assortments, enhancing the customer journey, and improving operational efficiency [4][5] - Plans to open 50 new stores by the end of 2029, with two new stores expected to open in Q3 2025 [7][18] - The company is focusing on leveraging technology, including AI, to enhance operational capabilities and customer experience [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the consumer's gradual return and the company's ability to navigate inflation and tariffs [9][42] - The company anticipates adjusted EBITDA for Q3 2025 to be in the range of $18 to $22 million, with sales expected to be flat to down low single digits [17] - Tariff impacts are projected to be approximately $5 million in Q3, with ongoing efforts to mitigate these costs through vendor negotiations and strategic pricing [17][18] Other Important Information - The company generated $17 million in free cash flow during the quarter, ending with $46 million in cash [10][14] - Capital expenditures for the quarter were about $3 million, focused on store improvements and the launch of ship-from-store capabilities [15] Q&A Session Summary Question: What drove the improvement in June and July? - The improvement was driven by clearance activities and a good customer response to promotions, particularly in July [23] Question: Expectations for promotional levels in the second half? - Promotional levels will depend on consumer acceptance of price increases, with a range of outcomes anticipated [26][43] Question: Opportunities for change and innovation after 100 days in the business? - Management noted cultural shifts and a focus on growing the customer file through product, customer journey, and operational improvements [33] Question: Thoughts on the state of the consumer? - The consumer is slowly returning, with optimism for Q3 as tariff concerns settle [42] Question: Changes in merchandising and customer engagement strategies? - The company is implementing a non-tender rewards program and adjusting marketing strategies to enhance customer engagement [48][51]

Financial Data and Key Metrics Changes - Total company sales for Q2 2025 were approximately $154 million, down 0.8% compared to Q2 2024, with comparable sales down 1% [10][11] - Adjusted EBITDA for the quarter was $25.6 million, compared to $30.2 million in Q2 2024 [12] - Gross profit for Q2 was about $105 million, down approximately $4 million from Q2 2024, with a gross margin of 68.4%, down 210 basis points year-over-year [11][12] - Adjusted net income per diluted share was $0.81, compared to $1.05 last year [12] Business Line Data and Key Metrics Changes - Store sales increased by 0.4% compared to Q2 2024, driven by three net new stores [11] - Direct sales, representing about 46% of total sales, decreased by approximately 2% compared to Q2 2024 [11] Market Data and Key Metrics Changes - The company experienced improved sales trends month over month in Q2, particularly in June and July, attributed to clearance activities and promotional efforts [10][23] - The company ended the quarter with clean inventories, having successfully cleared excess inventory units [15] Company Strategy and Development Direction - The company aims to expand its customer base by evolving product assortments, enhancing the customer journey, and improving operational efficiency [4][5] - Plans to open 50 new stores by the end of 2029, with two new stores expected to open in Q3 2025 [7][18] - Focus on leveraging technology, including AI, to enhance operational capabilities and customer experience [8] Management's Comments on Operating Environment and Future Outlook - The management acknowledged a dynamic and uncertain environment due to inflation and tariffs, but expressed confidence in the company's ability to navigate these challenges [9] - For Q3 2025, the company expects adjusted EBITDA in the range of $18 to $22 million, with sales anticipated to be flat to down low single digits [17] Other Important Information - The company generated $17 million of free cash flow in the quarter, ending with $46 million in cash [10][14] - The company repurchased 68,000 shares for approximately $1 million in Q2, with a total of 255,000 shares repurchased year-to-date [13][19] Q&A Session Summary Question: What drove the improvement in June and July? - The improvement was driven by clearance activities and a good customer response to promotions, particularly in July [23] Question: Expectations for promotional levels in the second half? - Promotional levels will depend on customer acceptance of price increases, with a range of outcomes anticipated [26][43] Question: Opportunities for change and innovation after 100 days in the business? - The focus is on growing the customer file through product, customer journey, and operational improvements [33] Question: Considerations for margins in the back half of the year? - The primary margin concern is tariffs, with strategic pricing actions aimed at offsetting tariff impacts [35] Question: State of the consumer and their sentiment? - The consumer is slowly returning, with optimism heading into Q3 as tariff concerns settle [42]

[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) J.Jill, Inc. announced Q2 FY25 results, including net sales of $154.0 million and a gross margin of 68.4%, and provided Q3 FY25 outlook [Announcement and Key Q2 FY25 Results](index=1&type=section&id=1.1.%20Announcement%20and%20Key%20Q2%20FY25%20Results) J.Jill, Inc. announced its second quarter fiscal year 2025 results, reporting net sales of $154.0 million and a gross margin of 68.4% | Metric | Q2 FY25 | | :----- | :------ | | Net Sales | $154.0 Million | | Gross Margin | 68.4% | [CEO Commentary](index=1&type=section&id=1.2.%20CEO%20Commentary) CEO Mary Ellen Coyne highlighted sequential sales improvement in Q2 FY25 and outlined a strategic framework for sustainable growth - Sequential improvement in sales trends each month during **Q2 FY25**, driven by improved traffic and positive customer response to the summer sale period[3](index=3&type=chunk) - Focus on realizing brand's untapped potential to expand customer file by executing a strategic framework: evolving product assortment, enhancing customer journey, and improving operational efficiency for sustainable, profitable growth[3](index=3&type=chunk) [Financial Performance Highlights](index=1&type=section&id=2.%20Financial%20Performance%20Highlights) This section details J.Jill's financial performance for Q2 FY25 and year-to-date, including sales, profit, and cash flow metrics [Second Quarter Fiscal Year 2025 (Q2 FY25) Performance](index=1&type=section&id=2.1.%20Second%20Quarter%20Fiscal%20Year%202025%20(Q2%20FY25)%20Performance) Q2 FY25 saw a slight decrease in net sales and comparable sales, a decline in gross and operating margins, but an increase in net income | Metric | Q2 FY25 (Millions) | Q2 FY24 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Net Sales | $154.0 | $155.2 | -0.8% | | Total Company Comparable Sales | -1.0% | N/A | N/A | | Direct to Consumer Net Sales (% of total) | 46.4% | N/A | -2.2% | | Gross Profit | $105.4 | $109.4 | -3.7% | | Gross Margin | 68.4% | 70.5% | -2.1 ppts | | SG&A | $88.6 | $86.3 | +2.7% | | Operating Income | $16.8 | $23.0 | -27.0% | | Operating Income Margin | 10.9% | 14.8% | -3.9 ppts | | Net Income | $10.5 | $8.2 | +28.0% | | Net Income per Diluted Share | $0.69 | $0.54 | +27.8% | - **Net Income** in **Q2 FY25** increased to **$10.5 million** from **$8.2 million** in **Q2 FY24**, primarily due to the absence of an **$8.6 million** loss on extinguishment of debt in the prior year[4](index=4&type=chunk)[25](index=25&type=chunk) [Twenty-Six Weeks Ended August 2, 2025 (YTD FY25) Performance](index=3&type=section&id=2.2.%20Twenty-Six%20Weeks%20Ended%20August%202,%202025%20(YTD%20FY25)%20Performance) YTD FY25 performance shows decreases in net sales, comparable sales, gross profit, operating income, and net income | Metric | YTD FY25 (Millions) | YTD FY24 (Millions) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Sales | $307.6 | $316.8 | -2.9% | | Total Company Comparable Sales | -3.5% | N/A | N/A | | Direct to Consumer Net Sales (% of total) | 46.6% | N/A | -3.8% | | Gross Profit | $215.7 | $227.1 | -5.0% | | Gross Margin | 70.1% | 71.7% | -1.6 ppts | | SG&A | $179.7 | $175.4 | +2.5% | | Operating Income | $35.8 | $51.4 | -30.3% | | Operating Income Margin | 11.7% | 16.2% | -4.5 ppts | | Net Income | $22.2 | $24.9 | -10.8% | | Net Income per Diluted Share | $1.45 | $1.69 | -14.2% | [Balance Sheet and Cash Flow Highlights](index=3&type=section&id=2.3.%20Balance%20Sheet%20and%20Cash%20Flow%20Highlights) Inventory increased, cash balance improved, and operating cash flow showed mixed trends for Q2 and YTD FY25 | Metric | Q2 FY25 (Millions) | Q2 FY24 (Millions) | Change | | :-------------------------------- | :----------------- | :----------------- | :----- | | Inventory | $55.3 | $52.7 | +4.9% | | Cash Balance (End of Q2) | $45.5 | N/A | N/A | | Net Cash from Operating Activities (Q2) | $19.4 | $16.4 | +18.3% | | Net Cash from Operating Activities (YTD) | $24.7 | $37.9 | -34.8% | | Free Cash Flow (Q2) | $16.6 | $14.1 | +17.7% | | Free Cash Flow (YTD) | $19.2 | $33.3 | -42.4% | [Capital Allocation and Shareholder Returns](index=4&type=section&id=3.%20Capital%20Allocation%20and%20Shareholder%20Returns) This section outlines J.Jill's share repurchase activities and quarterly dividend payments to shareholders [Share Repurchase Program](index=4&type=section&id=3.1.%20Share%20Repurchase%20Program) J.Jill repurchased shares in Q2 and YTD FY25, with $20.0 million remaining under the current program | Period | Shares Repurchased | Aggregate Purchase Price | | :----- | :----------------- | :----------------------- | | Q2 FY25 | 68,440 | $1.0 million | | YTD FY25 | 255,240 | $4.5 million | - As of **August 2, 2025**, **$20.0 million** remains under the **$25.0 million** share repurchase program, expiring by **December 6, 2026**, to be funded by existing cash and future free cash flow[10](index=10&type=chunk) [Quarterly Dividend Payments](index=4&type=section&id=3.2.%20Quarterly%20Dividend%20Payments) J.Jill declared and paid quarterly cash dividends of $0.08 per share in Q2 FY25 and subsequent to the quarter end | Declaration Date | Amount per Share | Payable Date | Record Date | | :--------------- | :--------------- | :----------- | :---------- | | June 3, 2025 | $0.08 | July 9, 2025 | June 25, 2025 | | August 27, 2025 | $0.08 | October 1, 2025 | September 17, 2025 | [Outlook](index=4&type=section&id=4.%20Outlook) This section provides J.Jill's financial guidance for the third quarter and full fiscal year 2025 [Third Quarter Fiscal Year 2025 (Q3 FY25) Outlook](index=4&type=section&id=4.1.%20Third%20Quarter%20Fiscal%20Year%202025%20(Q3%20FY25)%20Outlook) Q3 FY25 guidance incorporates an approximate $5.0 million incremental cost impact from tariffs - **Q3 FY25** guidance includes approximately **$5.0 million** incremental cost impact from tariffs, net of vendor negotiated offsets[13](index=13&type=chunk) [Fiscal Year 2025 (FY25) Outlook](index=4&type=section&id=4.2.%20Fiscal%20Year%202025%20(FY25)%20Outlook) FY25 outlook projects net sales to be flat to down low-single digits, with adjusted EBITDA between $18.0 million and $22.0 million | Metric | FY25 Outlook | | :-------------------------- | :------------------------------------ | | Net Sales | Approximately flat to down low-single digits | | Comparable Sales | Down low to mid-single digits | | Adjusted EBITDA | $18.0 million to $22.0 million | | Total Capital Expenditures | $20.0 million to $25.0 million | | Net New Store Growth | 1 to 5 new stores | [Company Information](index=6&type=section&id=5.%20Company%20Information) This section provides an overview of J.Jill, details for the Q2 FY25 conference call, and contact information [About J.Jill, Inc.](index=6&type=section&id=5.1.%20About%20J.Jill,%20Inc.) J.Jill is a national lifestyle brand offering apparel, footwear, and accessories through over 200 stores and an e-commerce platform - J.Jill is a national lifestyle brand providing apparel, footwear, and accessories for women, characterized by an easy, thoughtful, and inspired style[18](index=18&type=chunk) - Operates over **200 stores** nationwide and a robust e-commerce platform, offering a high-touch customer experience[18](index=18&type=chunk) [Conference Call Details](index=6&type=section&id=5.2.%20Conference%20Call%20Details) Details for the Q2 FY25 conference call, including dial-in and webcast information, and replay availability, are provided - Conference call for **Q2 FY25** results held on **September 3, 2025**, at **8:00 a.m. ET**, with dial-in and webcast options available. A replay is accessible until **September 10, 2025**[16](index=16&type=chunk)[17](index=17&type=chunk) [Contacts](index=18&type=section&id=5.3.%20Contacts) Contact information for Investor Relations and Business and Financial Media is provided for inquiries - Investor Relations contact: **Caitlin Churchill** (ICR, Inc.). Business and Financial Media contact: **Ariel Kouvaras** (Sloane & Company)[64](index=64&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=6&type=section&id=6.%20Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines J.Jill's non-GAAP financial measures and provides reconciliations to their most directly comparable GAAP measures [Non-GAAP Definitions and Rationale](index=6&type=section&id=6.1.%20Non-GAAP%20Definitions%20and%20Rationale) J.Jill uses non-GAAP measures like Adjusted EBITDA and Free Cash Flow to assess performance and aid planning, acknowledging their limitations - J.Jill uses non-GAAP measures (**Adjusted EBITDA**, **Adjusted Income from Operations**, **Adjusted Net Income**, **Adjusted Net Income per Diluted Share**, **Free Cash Flow**) to supplement GAAP, aiding management in assessing operating performance, planning, and forecasting[19](index=19&type=chunk) - Non-GAAP measures have limitations as analytical tools and should not be considered alternatives to GAAP measures. Reconciliations to the most directly comparable GAAP measures are provided[20](index=20&type=chunk) [Reconciliation of GAAP Net Income to Adjusted EBITDA](index=12&type=section&id=6.2.%20Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20EBITDA) This section reconciles GAAP Net Income to Adjusted EBITDA for both the thirteen and twenty-six week periods [Thirteen Weeks Ended August 2, 2025](index=12&type=section&id=6.2.1.%20Thirteen%20Weeks%20Ended%20August%202,%202025) Adjusted EBITDA for Q2 FY25 was $25.6 million (16.6% margin), a decrease from $30.2 million (19.4% margin) in Q2 FY24 | Metric | Q2 FY25 (Thousands) | Q2 FY24 (Thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net Income | $10,515 | $8,191 | | Depreciation and amortization | $5,305 | $5,007 | | Income tax provision | $4,033 | $3,075 | | Interest expense | $2,733 | $3,724 | | Loss on extinguishment of debt | $0 | $8,570 | | Other non-recurring items | $1,285 | $215 | | **Adjusted EBITDA** | **$25,589** | **$30,187** | | **Adjusted EBITDA Margin** | **16.6%** | **19.4%** | [Twenty-Six Weeks Ended August 2, 2025](index=13&type=section&id=6.2.2.%20Twenty-Six%20Weeks%20Ended%20August%202,%202025) Adjusted EBITDA for YTD FY25 was $52.9 million (17.2% margin), down from $65.8 million (20.8% margin) in the prior year | Metric | YTD FY25 (Thousands) | YTD FY24 (Thousands) | | :-------------------------------- | :------------------- | :------------------- | | Net Income | $22,207 | $24,887 | | Depreciation and amortization | $10,654 | $10,834 | | Income tax provision | $9,002 | $9,303 | | Interest expense | $5,522 | $10,160 | | Loss on extinguishment of debt | $0 | $8,570 | | Other non-recurring items | $2,660 | $438 | | **Adjusted EBITDA** | **$52,924** | **$65,834** | | **Adjusted EBITDA Margin** | **17.2%** | **20.8%** | [Reconciliation of GAAP Operating Income to Adjusted Income from Operations](index=14&type=section&id=6.3.%20Reconciliation%20of%20GAAP%20Operating%20Income%20to%20Adjusted%20Income%20from%20Operations) Adjusted Income from Operations decreased for both Q2 FY25 and YTD FY25, primarily due to equity-based compensation and non-recurring items | Metric | Q2 FY25 (Thousands) | Q2 FY24 (Thousands) | YTD FY25 (Thousands) | YTD FY24 (Thousands) | | :-------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Operating Income | $16,783 | $23,022 | $35,845 | $51,394 | | Equity-based compensation expense | $1,506 | $1,696 | $2,472 | $2,950 | | Other non-recurring items | $1,285 | $215 | $2,660 | $438 | | **Adjusted Income from Operations** | **$19,623** | **$24,936** | **$41,152** | **$54,535** | [Reconciliation of GAAP Net Income to Adjusted Net Income](index=15&type=section&id=6.4.%20Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income) This section reconciles GAAP Net Income to Adjusted Net Income for both the thirteen and twenty-six week periods [Thirteen Weeks Ended August 2, 2025](index=15&type=section&id=6.4.1.%20Thirteen%20Weeks%20Ended%20August%202,%202025) Adjusted Net Income for Q2 FY25 was $12.3 million ($0.81 diluted EPS), down from $15.8 million ($1.05 diluted EPS) in Q2 FY24 | Metric | Q2 FY25 (Thousands) | Q2 FY24 (Thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net Income | $10,515 | $8,191 | | Loss on extinguishment of debt | $0 | $8,570 | | Other adjustments (net of tax) | $1,830 | -$927 | | **Adjusted Net Income** | **$12,345** | **$15,834** | | **Adjusted Net Income per Diluted Share** | **$0.81** | **$1.05** | [Twenty-Six Weeks Ended August 2, 2025](index=16&type=section&id=6.4.2.%20Twenty-Six%20Weeks%20Ended%20August%202,%202025) Adjusted Net Income for YTD FY25 was $25.9 million ($1.69 diluted EPS), a decrease from $33.4 million ($2.27 diluted EPS) in the prior year | Metric | YTD FY25 (Thousands) | YTD FY24 (Thousands) | | :-------------------------------- | :------------------- | :------------------- | | Net Income | $22,207 | $24,887 | | Loss on extinguishment of debt | $0 | $8,570 | | Other adjustments (net of tax) | $3,719 | -$391 | | **Adjusted Net Income** | **$25,926** | **$33,416** | | **Adjusted Net Income per Diluted Share** | **$1.69** | **$2.27** | [Reconciliation of GAAP Cash from Operations to Free Cash Flow](index=17&type=section&id=6.5.%20Reconciliation%20of%20GAAP%20Cash%20from%20Operations%20to%20Free%20Cash%20Flow) Free Cash Flow increased for Q2 FY25 but decreased significantly for the twenty-six week period compared to the prior year | Metric | Q2 FY25 (Thousands) | Q2 FY24 (Thousands) | YTD FY25 (Thousands) | YTD FY24 (Thousands) | | :-------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Net cash provided by operating activities | $19,362 | $16,381 | $24,698 | $37,880 | | Less: Capital expenditures | ($2,752) | ($2,248) | ($5,476) | ($4,560) | | **Free Cash Flow** | **$16,610** | **$14,133** | **$19,222** | **$33,320** | [Consolidated Financial Statements](index=9&type=section&id=7.%20Consolidated%20Financial%20Statements) This section presents J.Jill's consolidated statements of operations, balance sheets, and selected cash flow information [Consolidated Statements of Operations and Comprehensive Income](index=9&type=section&id=7.1.%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This section provides detailed consolidated statements of operations for the thirteen and twenty-six week periods [For the Thirteen Weeks Ended](index=9&type=section&id=7.1.1.%20For%20the%20Thirteen%20Weeks%20Ended) The consolidated statement of operations for Q2 FY25 shows net sales of $154.0 million, gross profit of $105.4 million, and net income of $10.5 million | Metric | August 2, 2025 (Thousands) | August 3, 2024 (Thousands) | | :-------------------------------- | :------------------------- | :------------------------- | | Net sales | $153,987 | $155,242 | | Gross profit | $105,357 | $109,394 | | Operating income | $16,783 | $23,022 | | Net income | $10,515 | $8,191 | | Diluted EPS | $0.69 | $0.54 | [For the Twenty-Six Weeks Ended](index=10&type=section&id=7.1.2.%20For%20the%20Twenty-Six%20Weeks%20Ended) The consolidated statement of operations for YTD FY25 shows net sales of $307.6 million, gross profit of $215.7 million, and net income of $22.2 million | Metric | August 2, 2025 (Thousands) | August 3, 2024 (Thousands) | | :-------------------------------- | :------------------------- | :------------------------- | | Net sales | $307,611 | $316,755 | | Gross profit | $215,714 | $227,131 | | Operating income | $35,845 | $51,394 | | Net income | $22,207 | $24,887 | | Diluted EPS | $1.45 | $1.69 | [Consolidated Balance Sheets](index=11&type=section&id=7.2.%20Consolidated%20Balance%20Sheets) As of August 2, 2025, total assets increased to $436.5 million, with cash and cash equivalents at $45.5 million, and total shareholders' equity at $121.5 million | Metric | August 2, 2025 (Thousands) | February 1, 2025 (Thousands) | | :-------------------------- | :------------------------- | :--------------------------- | | Cash and cash equivalents | $45,523 | $35,427 | | Inventories, net | $55,268 | $61,295 | | Total current assets | $130,359 | $122,030 | | Total assets | $436,508 | $417,699 | | Total current liabilities | $117,164 | $127,108 | | Long-term debt, net | $70,016 | $69,419 | | Total liabilities | $315,007 | $311,930 | | Total shareholders' equity | $121,501 | $105,769 | [Selected Cash Flow Information](index=17&type=section&id=7.3.%20Selected%20Cash%20Flow%20Information) This section provides selected cash flow information for the thirteen and twenty-six week periods, detailing operating, investing, and financing activities | Metric | Q2 FY25 (Thousands) | Q2 FY24 (Thousands) | YTD FY25 (Thousands) | YTD FY24 (Thousands) | | :-------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Net cash provided by operating activities | $19,362 | $16,381 | $24,698 | $37,880 | | Net cash used in investing activities | ($2,752) | ($2,248) | ($5,476) | ($4,560) | | Net cash used in financing activities | ($2,332) | ($62,784) | ($9,126) | ($67,026) | | Net change in cash and cash equivalents | $14,278 | ($48,651) | $10,096 | ($33,706) | | Cash and cash equivalents and restricted cash (End of Period) | $45,886 | $28,834 | $45,886 | $28,834 | [Forward-Looking Statements](index=8&type=section&id=8.%20Forward-Looking%20Statements) This section contains forward-looking statements subject to various risks and uncertainties, with a caution against undue reliance - Forward-looking statements are based on current expectations and assumptions, inherently subject to risks and uncertainties, including economic conditions, consumer spending, competition, and tariffs[21](index=21&type=chunk) - J.Jill cautions investors not to place considerable reliance on forward-looking statements and undertakes no obligation to publicly update or revise them[21](index=21&type=chunk)

Group 1 - J.Jill, Inc. reported negative Q1 '25 results, with comparable store sales worsening significantly from year-end 2024 [1] - The company anticipates continued challenges in Q2, indicating a difficult operational environment ahead [1] - Margins at the merchandise level were moderately protected, but deleverage was deemed inevitable [1] Group 2 - The analysis emphasizes a long-only investment approach, focusing on operational aspects and long-term earnings power rather than market-driven dynamics [1] - The strategy involves holding companies independently of future price movements, with most calls being holds by design [1] - A small fraction of companies are considered buy opportunities at any given time, highlighting a cautious investment stance [1]

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements for Q1 2025, showing declines in net sales, net income, and operating cash flow compared to the prior year [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of May 3, 2025, total assets increased to $432.9 million, liabilities to $320.9 million, and shareholders' equity to $112.0 million Condensed Consolidated Balance Sheets (in thousands) | | May 3, 2025 | February 1, 2025 | | :--- | :--- | :--- | | **Total current assets** | $122,310 | $122,030 | | **Total assets** | $432,896 | $417,699 | | **Total current liabilities** | $124,053 | $127,108 | | **Total liabilities** | $320,923 | $311,930 | | **Total shareholders' equity** | $111,973 | $105,769 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For Q1 2025, net sales decreased 4.9% to $153.6 million, and net income fell 30.0% to $11.7 million, with diluted EPS at $0.76 Statement of Operations Highlights (in thousands, except per share data) | Metric | For the Thirteen Weeks Ended May 3, 2025 | For the Thirteen Weeks Ended May 4, 2024 | | :--- | :--- | :--- | | Net sales | $153,624 | $161,513 | | Gross profit | $110,357 | $117,737 | | Operating income | $19,062 | $28,372 | | Net income | $11,692 | $16,696 | | Diluted EPS | $0.76 | $1.16 | | Cash dividends declared per common share | $0.08 | $— | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to $5.3 million, while cash used in investing and financing activities increased for Q1 2025 Cash Flow Summary (in thousands) | Activity | For the Thirteen Weeks Ended May 3, 2025 | For the Thirteen Weeks Ended May 4, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,336 | $21,499 | | Net cash used in investing activities | $(2,724) | $(2,312) | | Net cash used in financing activities | $(6,794) | $(4,242) | | **Net change in cash and cash equivalents** | **$(4,182)** | **$14,945** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, revenue disaggregation by channel, debt, share repurchase, dividend programs, and share-based compensation - Effective March 2025, the company revised its Direct sales returns reserve methodology and reduced the return window, with **no material impact**[37](index=37&type=chunk) Disaggregation of Revenue (in thousands) | Channel | For the Thirteen Weeks Ended May 3, 2025 | For the Thirteen Weeks Ended May 4, 2024 | | :--- | :--- | :--- | | Retail | $81,813 | $85,607 | | Direct | $71,811 | $75,906 | | **Net sales** | **$153,624** | **$161,513** | - The company repurchased **186,800 shares** for **$3.5 million** under its share repurchase program, with **$21.0 million** remaining available as of May 3, 2025[74](index=74&type=chunk)[75](index=75&type=chunk) - A quarterly cash dividend of **$0.08 per share**, totaling **$1.2 million**, was paid, with a subsequent dividend declared on June 3, 2025[77](index=77&type=chunk)[79](index=79&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2025 net sales and gross margin declines to lower full-price sales and increased promotions, resulting in a 30.0% drop in net income [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q1 2025 net sales decreased 4.9% to $153.6 million, gross profit fell 6.3% to $110.4 million, and operating income declined 32.8% to $19.1 million Q1 2025 vs Q1 2024 Performance (in thousands) | Metric | Q1 2025 (Thirteen Weeks Ended May 3, 2025) | Q1 2024 (Thirteen Weeks Ended May 4, 2024) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $153,624 | $161,513 | $(7,889) | (4.9)% | | Gross profit | $110,357 | $117,737 | $(7,380) | (6.3)% | | SG&A expenses | $91,088 | $89,112 | $1,976 | 2.2% | | Operating income | $19,062 | $28,372 | $(9,310) | (32.8)% | | Net income | $11,692 | $16,696 | $(5,004) | (30.0)% | - Net sales decreased primarily due to a **5.7%** decline in comparable sales, driven by lower full-price mix and increased promotions[132](index=132&type=chunk) - Gross margin decreased from **72.9%** to **71.8%** due to lower full-price mix and increased promotional activities[134](index=134&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of May 3, 2025, the company had $31.2 million in cash and $35.7 million ABL availability, with operating cash flow decreasing to $5.3 million - As of May 3, 2025, the company held **$31.2 million** in cash and **$35.7 million** available under its ABL Facility[141](index=141&type=chunk) - In Fiscal Year 2024, the company made voluntary principal prepayments totaling **$85.4 million** on its Term Loan Credit Agreement[145](index=145&type=chunk) - Net cash from operating activities decreased by **$16.1 million** to **$5.3 million**, driven by a **$5.0 million** drop in net income and a **$9.5 million** negative change in working capital[149](index=149&type=chunk) - Net cash used in financing activities totaled **$6.8 million**, primarily for share repurchases (**$3.5 million**), taxes (**$2.0 million**), and dividends (**$1.2 million**)[153](index=153&type=chunk)[17](index=17&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposure occurred during Q1 2025 compared to the Fiscal Year 2024 Annual Report disclosures - There have been **no material changes** in the company's market risk exposure during the first quarter of Fiscal Year 2025[167](index=167&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) As of May 3, 2025, disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures are **effective** as of May 3, 2025[169](index=169&type=chunk) - **No changes** to internal control over financial reporting **materially affected** controls during Q1 Fiscal Year 2025[170](index=170&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) A class action concerning a stock repurchase program was dismissed as moot after the board amended the program, with the company paying $450,000 in fees - A class action complaint was filed on December 19, 2024, alleging **breach of fiduciary duties** related to a stock repurchase program[172](index=172&type=chunk) - To resolve litigation, the board **amended the repurchase program** to prevent TowerBrook Funds from owning more than **49.9%** of voting stock[173](index=173&type=chunk) - The action was **dismissed as moot**, and the company agreed to pay **$450,000** in attorneys' fees and expenses[175](index=175&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) As of the filing date, there have been no material changes to the risk factors previously disclosed in the Fiscal Year 2024 Annual Report - As of this Quarterly Report, there have been **no material changes** to previously disclosed risk factors in the 2024 Annual Report[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Under its $25.0 million program, the company repurchased 186,800 shares for $3.5 million, with $21.0 million remaining available Share Repurchase Activity (Thirteen weeks ended May 3, 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining ($) | | :--- | :--- | :--- | :--- | | Feb 2 - Mar 1, 2025 | — | $— | $24,477,079 | | Mar 2 - Apr 5, 2025 | 186,800 | $18.84 | $20,957,463 | | Apr 6 - May 3, 2025 | — | $— | $20,957,463 | | **Total** | **186,800** | | **$20,957,463** | [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) This section discloses that CEO Claire Spofford and CFO Mark Webb entered into Rule 10b5-1 trading plans for potential share sales - CEO Claire Spofford entered a Rule 10b5-1 trading plan for the potential sale of up to **67,500 shares** of common stock[182](index=182&type=chunk) - CFO Mark Webb entered a Rule 10b5-1 trading plan for the potential sale of up to **30,000 shares** of common stock[184](index=184&type=chunk)

Financial Data and Key Metrics Changes - Total company sales for Q1 were approximately $154 million, down 4.9% compared to Q1 2024, with comparable sales declining 5.7% [13] - Q1 gross profit was about $110 million, down approximately $7 million compared to Q1 2024, resulting in a gross margin of 71.8%, down 110 basis points year-over-year [14][15] - Adjusted EBITDA for the quarter was $27.3 million, compared to $35.6 million in Q1 2024 [15] - Adjusted net income per diluted share was $0.88, down from $1.22 last year, reflecting a diluted share count increase from 14.4 million to 15.4 million [16] Business Line Data and Key Metrics Changes - Store sales for Q1 were down about 4.4% compared to Q1 2024, while direct sales, which represented about 47% of total sales, were down 5.4% [14] - The decline in direct sales was attributed to adverse weather impacting store traffic and the OMS cutover affecting the direct channel [14] Market Data and Key Metrics Changes - The macroeconomic environment remained volatile, with uncertainty related to global trade policy affecting customer behavior, particularly in April and May [12][13] - Total company sales for the quarter reflected a $2 million negative impact from the OMS cutover [14] Company Strategy and Development Direction - The company is focused on leveraging investments made in stores, marketing, and systems to improve performance [10] - There is a commitment to maintaining a disciplined approach to inventory management and strategic pricing to mitigate tariff impacts [20][22] - The company is evaluating nonessential capital spending while maintaining marketing investments to support customer engagement [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term resiliency of the customer base despite near-term uncertainties related to tariffs and macroeconomic conditions [13][20] - The company has withdrawn its prior full-year guidance to allow the new CEO time to assess the business [19][56] - Management noted that while sales are down mid-single digits through May, they expect to see improvements as comparisons become easier [19][55] Other Important Information - The company closed three stores during Q1 and did not open any new stores, resulting in a total of 249 stores at the end of the quarter [18][19] - Capital expenditures for the quarter were $2.7 million, focused primarily on stores and the completion of the OMS project [18] Q&A Session Summary Question: What strategies were implemented during tariffs at J. McLaughlin, and what are the opportunities for J. Jill? - Management discussed strategies around tariff exposure, including vendor negotiations and order adjustments to mitigate costs [26][28] Question: How is the company planning to roll out new products while managing tariff dynamics? - Management indicated that while the product line is bought through the end of the year, small adjustments can be made, with significant impacts expected in 2026 [41] Question: What is the outlook for new store openings and their performance? - Management confirmed that new stores opened in the past year are performing as expected, and they remain optimistic about future store growth opportunities [71][74] Question: How has weather impacted customer behavior and sales? - Management noted that weather has had a general impact on customer traffic, with no significant regional differences observed [65] Question: What are the plans for the ship-from-store initiative? - Management emphasized the importance of managing shipping costs while ramping up the ship-from-store capability to fulfill previously unfulfilled demand [62][63]