PART I. FINANCIAL INFORMATION [Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2022 consolidated financial statements show significant performance improvement, with net income of $14.4 million and positive operating cash flow [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) As of April 30, 2022, total assets increased to $463.6 million, liabilities slightly decreased, and shareholders' deficit improved to $30.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | April 30, 2022 | January 29, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $40,839 | $35,957 | | Inventories, net | $63,216 | $56,024 | | Total current assets | $138,786 | $123,248 | | Total assets | $463,582 | $451,849 | | **Liabilities & Shareholders' Deficit** | | | | Total current liabilities | $138,156 | $138,745 | | Long-term debt, net | $202,664 | $202,116 | | Total liabilities | $493,900 | $496,503 | | Total shareholders' deficit | $(30,318) | $(44,654) | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29%20%28Unaudited%29) Q1 2022 reported a significant turnaround with $14.4 million net income, driven by 21.7% net sales growth and improved gross margin Statement of Operations Summary (in thousands, except per share data) | Metric | For the Thirteen Weeks Ended April 30, 2022 | For the Thirteen Weeks Ended May 1, 2021 | | :--- | :--- | :--- | | Net sales | $157,069 | $129,086 | | Gross profit | $109,463 | $87,826 | | Operating income | $23,885 | $8,687 | | Net income (loss) | $14,415 | $(18,308) | | Diluted EPS | $1.02 | $(1.89) | [Condensed Consolidated Statements of Shareholders' Deficit (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Deficit%20%28Unaudited%29) Shareholders' deficit improved from $(44.7) million to $(30.3) million as of April 30, 2022, driven by $14.4 million net income - The shareholders' deficit decreased from **$(44,654) thousand** at the start of the quarter to **$(30,318) thousand** at the end, mainly due to the **$14,415 thousand** in net income[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) Q1 2022 net cash from operations was $7.2 million, a significant improvement from prior year's $4.1 million use, driven by higher net income Cash Flow Summary (in thousands) | Cash Flow Activity | For the Thirteen Weeks Ended April 30, 2022 | For the Thirteen Weeks Ended May 1, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7,168 | $(4,133) | | Net cash used in investing activities | $(750) | $(476) | | Net cash (used in) provided by financing activities | $(1,536) | $10,927 | | **Net change in cash** | **$4,882** | **$6,318** | | **Cash, End of Period** | **$40,839** | **$10,725** | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Notes detail accounting policies, revenue disaggregation, stable goodwill, debt facilities, covenant compliance, and related party transactions - J.Jill is an omnichannel retailer of women's apparel, operating about **250 stores** and a robust e-commerce platform[18](index=18&type=chunk) Disaggregated Revenue by Source (in thousands) | Channel | For the Thirteen Weeks Ended April 30, 2022 | For the Thirteen Weeks Ended May 1, 2021 | | :--- | :--- | :--- | | Retail | $84,212 | $54,916 | | Direct | $72,857 | $74,170 | | **Net revenues** | **$157,069** | **$129,086** | - Goodwill balance was stable at **$59.7 million** as of April 30, 2022, with no impairment losses recorded during the period. Accumulated goodwill impairment losses from prior periods total **$137.3 million**[31](index=31&type=chunk) - Total outstanding debt was **$226.1 million** as of April 30, 2022. The company was in compliance with all financial covenants[36](index=36&type=chunk)[40](index=40&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q1 2022 performance to 24.0% comparable sales growth, 21.7% net sales increase, expanded gross margin, and significantly higher Adjusted EBITDA - Key factors affecting operating results include overall economic trends, consumer preferences, competition, strategic initiatives like e-commerce enhancement, pricing, and potential changes in tax laws[67](index=67&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk) Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Metric | For the Thirteen Weeks Ended April 30, 2022 | For the Thirteen Weeks Ended May 1, 2021 | | :--- | :--- | :--- | | Net income (loss) | $14,415 | $(18,308) | | **Adjusted EBITDA** | **$31,297** | **$16,925** | | Net sales | $157,069 | $129,086 | | **Adjusted EBITDA margin** | **19.9%** | **13.1%** | [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Q1 2022 net sales increased 21.7% to $157.1 million, driven by 24.0% comparable sales growth and improved gross margin to 69.7%, leading to a 175.0% surge in operating income - Net sales increased by **$28.0 million** (**21.7%**) to **$157.1 million**, driven by a **24.0%** increase in total company comparable sales, increased retail traffic, and strong full-price sales[91](index=91&type=chunk) - Gross margin improved to **69.7%** from **68.0%** in the prior year, benefiting from better full-price selling and lower promotional activity[93](index=93&type=chunk) - SG&A expenses increased by **$6.4 million** (**8.1%**), mainly due to a **$3.8 million** increase in management incentive bonus expense and a **$1.4 million** increase in marketing expenses[94](index=94&type=chunk) - The effective tax rate was **25.8%** for Q1 2022, compared to **(8.2%)** for Q1 2021. The prior year's negative rate was due to nondeductible fair value adjustments of warrants and other items[99](index=99&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) Primary liquidity sources include $40.8 million cash and $35.5 million ABL Facility availability, with cash flow from operations significantly improving to $7.2 million - As of April 30, 2022, the company had **$40.8 million** in cash and **$35.5 million** of total availability under its ABL Facility[100](index=100&type=chunk) - The maturity date of the ABL Facility was extended from **May 8, 2023**, to **May 8, 2024**, and the benchmark interest rate was changed from LIBOR to SOFR[100](index=100&type=chunk)[47](index=47&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | For the Thirteen Weeks Ended April 30, 2022 | For the Thirteen Weeks Ended May 1, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7,168 | $(4,133) | | Net cash used in investing activities | $(750) | $(476) | | Net cash (used in) provided by financing activities | $(1,536) | $10,927 | [Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposure occurred during Q1 Fiscal Year 2022, consistent with prior Annual Report disclosures - There have been no material changes in the Company's exposure to market risk during the first quarter of Fiscal Year 2022[122](index=122&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of April 30, 2022, with no material changes to internal controls during Q1 - The Chief Executive Officer and Chief Financial Officer concluded that as of April 30, 2022, the company's disclosure controls and procedures are effective[123](index=123&type=chunk) - No changes in internal control over financial reporting occurred during the first quarter of Fiscal Year 2022 that have materially affected, or are reasonably likely to materially affect, the company's internal controls[124](index=124&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings, none of which are expected to have a material adverse effect on its financial condition or operations - Management does not believe the company is party to any legal proceedings that would have a material adverse effect on its business, financial condition, operating results, or cash flows[127](index=127&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors occurred as of the date of this Quarterly Report - As of the date of this Quarterly Report, there have been no material changes to the risk factors previously disclosed in the 2021 Annual Report[128](index=128&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - None[129](index=129&type=chunk) [Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - None[130](index=130&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[131](index=131&type=chunk) [Other Information](index=23&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - None[132](index=132&type=chunk) [Exhibits](index=23&type=section&id=Item%206.%20Exhibits) Exhibits listed in the Exhibit Index are filed or furnished as part of this Quarterly Report - The exhibits listed on the Exhibit Index are filed or furnished as part of this Quarterly Report[133](index=133&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 29, 2022 (Exact name of Registrant as specified in its Charter) | Delaware | 45-1459825 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | | 4 Batterymarch Park Quincy, MA | 02169 | | (Address of principal executive offic ...

Financial Data and Key Metrics Changes - Fiscal 2021 saw total sales grow to $585 million, a 37% increase compared to 2020, with gross margin improving by 980 basis points versus 2020 and 540 basis points compared to 2019 [5][17] - Adjusted EBITDA for fiscal 2021 reached $92 million, reflecting a significant year-over-year increase and a 620 basis point expansion compared to pre-COVID 2019 levels [6][17] - Q4 total company sales were $145 million, up 15% from Q4 2020, but down 14% compared to Q4 2019 [21][22] Business Line Data and Key Metrics Changes - Store sales in Q4 increased over 62% compared to Q4 2020, but were down 21% compared to 2019 levels [22] - Direct sales accounted for 52% of total sales in Q4, down 9% from the previous year due to lower markdown sales, partially offset by higher full-price sales [23] Market Data and Key Metrics Changes - Store traffic was negatively impacted by the Omicron variant during the holiday season but showed recovery later in January as cases declined [9] - The company ended the year with inventory levels down 3.5% compared to the end of 2020, indicating a healthier balance of full-price versus markdown units [26] Company Strategy and Development Direction - The company aims to modernize the J.Jill brand and value proposition, attract new customers through strategic marketing, and drive growth in high-potential sub-brands like Pure Jill and J.Jill Fit [13] - Future growth will focus on disciplined inventory and expense management, with plans for new store openings in high-potential locations [12][32] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver continued traction and results despite macro-related headwinds, emphasizing a disciplined approach to managing the business [15] - The company expects sales growth of 11% to 14% in Q1 2022 compared to Q1 2021, with adjusted EBITDA projected between $20 million and $22 million [28] Other Important Information - Capital expenditures for the year are expected to increase to between $15 million and $18 million, focusing on technology investments and new store openings [33][61] - The company plans to close approximately 10 stores in fiscal 2022 while selectively reviewing opportunities for new store openings [32] Q&A Session Summary Question: Inventory levels and their impact on sales - Management acknowledged that lower inventory levels constrained sales in Q4 but emphasized the importance of reducing markdowns as part of their operating model strategy [40][41] Question: Freight expenses and product strength - Management indicated that freight expenses are expected to remain elevated in the first half of the year, while product categories like dresses and travel outfits are seeing strong demand [51][56] Question: Employee turnover and labor market challenges - Management reported a relatively low turnover rate and successful talent acquisition despite a tight labor market [72][73] Question: Consumer health amid inflation - Management noted that their consumer base remains strong and less susceptible to inflationary pressures, with no significant impact on business observed so far [76][77] Question: Plans for excess cash and debt management - Management expressed interest in improving the capital structure and reducing debt, while also considering options for utilizing excess cash [78][79]

(Mark One) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _____________________ Commission File Number: 001-38026 J.Jill, Inc. (Exact Name of Registrant as Specified in its Charter) Delawar ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 J.Jill, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 45-1459825 (State or other jurisdiction of incorporation or organization) 4 Batterymarch Park, Quincy, MA 02169 02169 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 376-4300 Securities regi ...

J.Jill, Inc. (NYSE:JILL) Q2 2021 Results Conference Call September 9, 2021 12:00 AM ET Company Participants Claire Spofford - President & Chief Executive Officer Mark Webb - Executive Vice President & Chief Financial and Operating Officer Conference Call Participants Dana Telsey - Telsey Group Janet Kloppenburg - JJK Research Associates Operator Good morning. My name is Sue, and I will be your conference operator today. At this time, I would like to welcome everyone to the J.Jill's Second Quarter Fiscal 202 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Mark One) WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 1, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _____________________ Commission File Number: 001-38026 J.Jill, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 45- ...

Sales Channels - J.Jill's Retail channel represented 34.5% of net sales for Fiscal Year 2020, down from 56.3% in Fiscal Year 2019 due to the impact of the COVID-19 pandemic [25]. - The Direct channel accounted for 65.5% of total net sales for Fiscal Year 2020, with ecommerce making up approximately 93% of Direct channel net sales [30]. - Omnichannel customers comprised 21% of the active customer base in Fiscal Year 2020, showing a slight increase from 22% in Fiscal Year 2019 and 2018 [19]. Customer Demographics - The average targeted customer is 45 years and older, college-educated, with an annual household income of approximately $150,000 [18]. - In Fiscal Year 2020, 53% of gross sales were generated by credit card holders, indicating strong customer loyalty and engagement [46]. - The company aims to attract new customers and retain existing ones by refining its brand position to appeal to women aged 45 and older, a relatively underserved demographic [38]. Store Operations - J.Jill operates 267 stores across 42 states as of January 30, 2021, with store sizes ranging from approximately 2,000 to 6,000 square feet [25]. - New store openings have been primarily in lifestyle centers, with no new stores opened in Fiscal Year 2020, maintaining a total of 267 stores [29]. Product Development - The company introduced merchandise collections approximately every six to eight weeks, with a new product development lifecycle typically taking 48 weeks from design concept to delivery [23]. - Approximately 80% of products were sourced through agents, while 20% were sourced directly from suppliers and factories in Fiscal Year 2020 [47]. - The company has no long-term merchandise supply contracts, allowing for flexibility in sourcing and product development [49]. Marketing and Customer Engagement - The company’s catalogs are a primary marketing vehicle, designed in-house to promote brand image and drive customer engagement across channels [44]. - J.Jill's customer database allows for tracking approximately 98% of transactions to identifiable customers, enhancing targeted marketing efforts [34]. - The customer contact center managed approximately 4.3 million customer interactions in Fiscal Year 2020, serving as a critical feedback loop for the brand [51]. Operational Performance - The distribution center handled 31 million units in Fiscal Year 2020, with 12 million units (39%) for retail and 19 million units (61%) for direct sales [50]. - The company employed 1,169 full-time and 1,743 part-time associates as of January 30, 2021, reflecting a robust workforce to support operations [55]. Financial Risks - A 10% change in the current interest rate would have affected net income by $1.1 million during Fiscal Year 2020, highlighting interest rate risk exposure [263]. Future Plans - The company plans to enhance its website to provide a more personalized shopping experience, aiming to broaden customer reach and drive additional sales [39]. - The company has a well-diversified omnichannel platform that aims to deliver a seamless brand experience across retail stores, website, and catalogs [24]. Brand Positioning - The brand emphasizes a differentiated image that fosters deep connections with customers, focusing on comfort, ease, and versatility in its product offerings [16].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _____________________ Commission File Number: 001-38026 J.Jill, Inc. (Exact Name of Registrant as Specified in its Charter) Delawar ...

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) J.Jill's unaudited consolidated financial statements and notes detail COVID-19 impact, covenant non-compliance, and restructuring efforts [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements, including balance sheets, income, cash flow, and equity, are presented with detailed notes [Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Unaudited consolidated balance sheets detail assets, liabilities, and shareholders' equity at key fiscal dates Consolidated Balance Sheets (Unaudited) | Metric | August 1, 2020 (in thousands) | February 1, 2020 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :------- | | **Assets** | | | | | | Total current assets | $144,236 | $122,950 | $21,286 | 17.3% | | Total assets | $574,650 | $633,988 | $(59,338) | (9.4%) | | **Liabilities & Shareholders' Equity** | | | | | | Total current liabilities | $413,202 | $122,439 | $290,763 | 237.5% | | Long-term debt, net of discount and current portion | $— | $231,200 | $(231,200) | (100.0%) | | Total liabilities | $624,247 | $595,423 | $28,824 | 4.8% | | Total shareholders' equity | $(49,597) | $38,565 | $(88,162) | (228.6%) | - The significant increase in **current liabilities** is primarily due to the reclassification of long-term debt to current portion of long-term debt, reflecting the company's financial distress and covenant non-compliance[9](index=9&type=chunk)[54](index=54&type=chunk) [Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20(Unaudited)) Unaudited consolidated statements of operations and comprehensive income (loss) are presented for specified fiscal periods Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) | Metric | 13 Weeks Ended Aug 1, 2020 (in thousands) | 13 Weeks Ended Aug 3, 2019 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Net sales | $92,636 | $180,744 | $(88,108) | (48.7%) | | Gross profit | $55,020 | $105,341 | $(50,321) | (47.8%) | | Operating loss | $(21,824) | $(94,785) | $72,961 | (77.0%) | | Net loss | $(19,034) | $(96,735) | $77,701 | (80.3%) | | Basic EPS | $(0.43) | $(2.21) | $1.78 | (80.5%) | | Metric | 26 Weeks Ended Aug 1, 2020 (in thousands) | 26 Weeks Ended Aug 3, 2019 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------- | | Net sales | $183,605 | $357,196 | $(173,591) | (48.6%) | | Gross profit | $105,185 | $221,597 | $(116,412) | (52.5%) | | Operating loss | $(111,567) | $(83,974) | $(27,593) | 32.9% | | Net loss | $(89,303) | $(92,369) | $3,066 | (3.3%) | | Basic EPS | $(2.00) | $(2.12) | $0.12 | (5.7%) | - Net sales for the thirteen weeks ended August 1, 2020, decreased by **48.7%** due to temporary store closures caused by the COVID-19 pandemic[109](index=109&type=chunk) - The company reported a significant reduction in **net loss** for the thirteen weeks ended August 1, 2020, primarily due to lower impairment charges compared to the prior year[11](index=11&type=chunk)[108](index=108&type=chunk) [Consolidated Statement of Shareholders' Equity (Unaudited)](index=5&type=section&id=Consolidated%20Statement%20of%20Shareholders'%20Equity%20(Unaudited)) Unaudited consolidated statement of shareholders' equity details changes in equity over time Consolidated Statement of Shareholders' Equity (Unaudited) | Metric | August 1, 2020 (in thousands) | February 1, 2020 (in thousands) | Change (in thousands) | % Change | | :----------------------- | :----------------------------- | :------------------------------ | :-------------------- | :------- | | Total Shareholders' Equity | $(49,597) | $38,565 | $(88,162) | (228.6%) | | Accumulated (Deficit) | $(176,257) | $(86,954) | $(89,303) | 102.7% | - Shareholders' equity significantly declined from a positive balance of **$38.6 million** at February 1, 2020, to a deficit of **$(49.6) million** at August 1, 2020, primarily driven by net losses[13](index=13&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Unaudited consolidated statements of cash flows categorize cash movements from operating, investing, and financing Consolidated Statements of Cash Flows (Unaudited) | Metric | 26 Weeks Ended Aug 1, 2020 (in thousands) | 26 Weeks Ended Aug 3, 2019 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Net cash (used in) provided by operating activities | $(17,340) | $23,536 | $(40,876) | (173.7%) | | Net cash used in investing activities | $(2,675) | $(7,904) | $5,229 | (66.2%) | | Net cash provided by (used in) financing activities | $30,250 | $(52,712) | $82,962 | (157.4%) | | Net change in cash | $10,235 | $(37,080) | $47,315 | (127.6%) | | Cash, End of Period | $31,762 | $29,124 | $2,638 | 9.1% | - Operating activities shifted from providing **$23.5 million** in cash in the prior year to using **$17.3 million**, primarily due to the impact of COVID-19 related store closures, partially offset by working capital improvements from deferred rent and extended vendor payment terms[135](index=135&type=chunk)[136](index=136&type=chunk) - Net cash provided by financing activities significantly increased to **$30.3 million**, driven by borrowings under the ABL Facility, contrasting with a **$52.7 million** use of cash in the prior year due to a special dividend payment[139](index=139&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) Detailed notes explain significant accounting policies, revenue, asset impairments, debt, income taxes, and other financial disclosures [1. Description of Business](index=7&type=section&id=1.%20Description%20of%20Business) J.Jill, Inc. is a premier omnichannel retailer of women's apparel, operating stores and an e-commerce platform - J.Jill, Inc. is a premier omnichannel retailer and nationally recognized women's apparel brand, operating approximately **280 stores** nationwide and a robust e-commerce platform[19](index=19&type=chunk) [2. Summary of Significant Accounting Policies](index=7&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Significant accounting policies, including going concern assessment and responses to the COVID-19 pandemic, are outlined - The company's management has evaluated conditions that raise substantial doubt about its ability to continue as a going concern within one year, primarily due to the material adverse impact of the COVID-19 pandemic on revenues, operations, and cash flows, leading to covenant non-compliance[22](index=22&type=chunk)[24](index=24&type=chunk) - In response to the pandemic, J.Jill closed all stores in March 2020, began reopening in May 2020, and implemented aggressive cost reduction measures including staffing reductions, pay cuts, deferred rent payments, catalog reductions, and significantly reduced capital expenditures[23](index=23&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - The company entered into forbearance agreements with lenders, extended until September 26, 2020, and subsequently announced a Transaction Support Agreement (TSA) for a financial restructuring to waive past non-compliance and provide liquidity, aiming for an out-of-court resolution or a prepackaged Chapter 11 plan[24](index=24&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [3. Revenues](index=9&type=section&id=3.%20Revenues) Net revenues are disaggregated by retail and direct channels, detailing contract liabilities like gift cards and signing bonuses Revenues | Revenue Source | 13 Weeks Ended Aug 1, 2020 (in thousands) | 13 Weeks Ended Aug 3, 2019 (in thousands) | 26 Weeks Ended Aug 1, 2020 (in thousands) | 26 Weeks Ended Aug 3, 2019 (in thousands) | | :------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Retail | $26,304 | $103,666 | $61,397 | $206,260 | | Direct | $66,332 | $77,078 | $122,208 | $150,936 | | Net revenues | $92,636 | $180,744 | $183,605 | $357,196 | - For the thirteen weeks ended August 1, 2020, Direct channel sales surpassed Retail sales, contributing **71.6% of net sales**, a significant shift from **42.6%** in the prior year, reflecting the impact of store closures[33](index=33&type=chunk)[110](index=110&type=chunk) Contract Liabilities | Contract Liabilities | August 1, 2020 (in thousands) | February 1, 2020 (in thousands) | | :------------------- | :----------------------------- | :------------------------------ | | Signing bonus | $435 | $506 | | Unredeemed gift cards | $5,825 | $7,264 | | Total | $6,260 | $7,770 | [4. Other Income](index=10&type=section&id=4.%20Other%20Income) Other income details an insurance claim settlement related to nonsalable inventory from a cargo vessel fire - In July 2019, the company settled an insurance claim for **$3.3 million** related to nonsalable inventory from a cargo vessel fire in January 2019, recording a **$2.4 million** gain in selling, general and administrative expenses[37](index=37&type=chunk) [5. Asset Impairments](index=10&type=section&id=5.%20Asset%20Impairments) Non-cash impairment charges on long-lived assets, goodwill, and tradename are detailed due to the COVID-19 pandemic - In Q1 Fiscal Year 2020, the company incurred **$27.5 million** in non-cash impairment charges on long-lived assets (**$6.7 million** on leasehold improvements, **$20.8 million** on right-of-use assets) due to the material adverse effect of the COVID-19 pandemic on its store fleet[38](index=38&type=chunk) - The company recorded a **$17.9 million** impairment of goodwill, a **$4.0 million** impairment of tradename, and a **$2.6 million** impairment of customer list in Q1 Fiscal Year 2020, triggered by the COVID-19 pandemic's impact on operations and stock price[40](index=40&type=chunk)[41](index=41&type=chunk) Goodwill | Goodwill (in thousands) | Amount | | :---------------------- | :----- | | Balance, February 2, 2019 | $197,026 | | Impairment losses (FY19) | $(119,429) | | Balance, February 1, 2020 | $77,597 | | Impairment losses (FY20) | $(17,900) | | Balance, August 1, 2020 | $59,697 | | Accumulated goodwill impairment losses as of August 1, 2020 | $137,300 | [6. Restructuring Costs](index=11&type=section&id=6.%20Restructuring%20Costs) Restructuring costs incurred from headcount reductions at corporate headquarters and a New Hampshire facility are outlined - In July 2019, J.Jill implemented a restructuring plan, incurring **$1.6 million** in costs primarily from headcount reductions at its corporate headquarters and a facility in New Hampshire, with payments expected to be complete by October 31, 2020[48](index=48&type=chunk)[49](index=49&type=chunk) [7. Debt](index=12&type=section&id=7.%20Debt) The company's debt, including term loans and revolving credit, covenant non-compliance, and restructuring efforts, is detailed Debt Component | Debt Component (in thousands) | August 1, 2020 | February 1, 2020 | | :---------------------------- | :------------- | :--------------- | | Term Loan | $236,179 | $237,579 | | Discount on debt and debt issuance costs | $(2,827) | $(3,580) | | Less: Current portion | $(233,352) | $(2,799) | | Net long-term debt | $— | $231,200 | | Borrowings under revolving credit facility | $31,800 | $— | - Due to COVID-19 related store closures and the going concern disclosure, the company failed to comply with financial covenants, leading to forbearance agreements with lenders, which were extended until September 26, 2020[52](index=52&type=chunk) - The company entered into a Transaction Support Agreement (TSA) on September 1, 2020, with over **70%** of term loan lenders and a majority of shareholders, to restructure debt and extend maturity by two years (through May 2024) via an out-of-court or prepackaged Chapter 11 transaction[53](index=53&type=chunk)[54](index=54&type=chunk) [8. Income Taxes](index=12&type=section&id=8.%20Income%20Taxes) Income tax benefit and effective tax rates, including the impact of CARES Act provisions, are provided Income Tax Metrics | Metric | 13 Weeks Ended Aug 1, 2020 | 13 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 1, 2020 | 26 Weeks Ended Aug 3, 2019 | | :---------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Income tax benefit (in thousands) | $7,034 | $3,069 | $31,151 | $1,631 | | Effective tax rate | 27.0% | 3.1% | 25.9% | 1.7% | - The higher effective tax rate in Fiscal Year 2020 was primarily driven by the anticipated benefit from the CARES Act, which allows net operating losses to be carried back to earlier tax years with higher rates, and the impact of state income taxes[56](index=56&type=chunk) - The company expects a **$6.9 million** tax refund due to CARES Act provisions, including bonus depreciation, net operating loss carryback, and accelerated AMT credit refunds, of which **$1.2 million** has been received[58](index=58&type=chunk) [9. Earnings Per Share](index=13&type=section&id=9.%20Earnings%20Per%20Share) Basic and diluted earnings per share calculations are presented, noting diluted EPS equals basic EPS due to net losses Earnings Per Share | Metric | 13 Weeks Ended Aug 1, 2020 | 13 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 1, 2020 | 26 Weeks Ended Aug 3, 2019 | | :------------------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net loss attributable to common shareholders (in thousands) | $(19,034) | $(96,735) | $(89,303) | $(92,369) | | Basic EPS | $(0.43) | $(2.21) | $(2.00) | $(2.12) | | Diluted EPS | $(0.43) | $(2.21) | $(2.00) | $(2.12) | - Diluted EPS is the same as basic EPS due to net losses, which render outstanding equity awards antidilutive[59](index=59&type=chunk) [10. Equity-Based Compensation](index=13&type=section&id=10.%20Equity-Based%20Compensation) Equity-based compensation expense and adjustments to outstanding equity awards following a special cash dividend are detailed Equity-Based Compensation Expense | Period | Equity-Based Compensation Expense (in thousands) | | :------------------------- | :------------------------------------- | | 13 Weeks Ended Aug 1, 2020 | $615 | | 13 Weeks Ended Aug 3, 2019 | $1,214 | | 26 Weeks Ended Aug 1, 2020 | $1,291 | | 26 Weeks Ended Aug 3, 2019 | $2,416 | - Equity-based compensation expense decreased by approximately **49%** for the thirteen weeks and **46%** for the twenty-six weeks ended August 1, 2020, compared to the prior year periods[60](index=60&type=chunk) - In March 2019, the company declared a special cash dividend of **$1.15 per share** (**$50.2 million** total), leading to anti-dilution adjustments for outstanding equity awards, including RSU adjustments and option strike price reductions[61](index=61&type=chunk)[62](index=62&type=chunk) [11. Related Party Transactions](index=14&type=section&id=11.%20Related%20Party%20Transactions) Related party transactions for the reported periods were immaterial - The company incurred an immaterial amount of related party transactions for the thirteen and twenty-six weeks ended August 1, 2020, and August 3, 2019[63](index=63&type=chunk) [12. Commitments and Contingencies](index=14&type=section&id=12.%20Commitments%20and%20Contingencies) Legal proceedings and other commitments are addressed, with no material adverse effect anticipated - The company is subject to various legal proceedings in the ordinary course of business but does not believe any will have a material adverse effect on its financial condition or operations[64](index=64&type=chunk) [13. Operating Leases](index=14&type=section&id=13.%20Operating%20Leases) Operating lease costs, rent payment withholdings, and negotiated lease concessions due to COVID-19 are detailed Lease Cost | Lease Cost (in thousands) | 13 Weeks Ended Aug 1, 2020 | 13 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 1, 2020 | 26 Weeks Ended Aug 3, 2019 | | :------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Operating lease cost | $10,913 | $11,820 | $22,742 | $23,372 | | Variable lease cost | $478 | $774 | $896 | $1,540 | | Total lease cost | $11,391 | $12,594 | $23,638 | $24,912 | - Due to COVID-19, the company withheld **$17.1 million** in rent payments as of August 1, 2020, and successfully negotiated lease concessions (abated and deferred rent, term extensions) for some leases[68](index=68&type=chunk)[69](index=69&type=chunk) Lease Term and Discount Rate | Lease Term and Discount Rate (as of August 1, 2020) | Value | | :---------------------------------- | :---- | | Weighted-average remaining lease term (in years) | 6.9 | | Weighted-average discount rate | 6.6% | [14. Barter Arrangement](index=15&type=section&id=14.%20Barter%20Arrangement) A barter arrangement involving inventory exchange for media credits and the resulting gain is described - In Q3 Fiscal Year 2019, the company exchanged **$3.3 million** of inventory for media credits, recording a **$1.3 million** gain upon shipment and holding **$2.0 million** in unused media credits as of August 1, 2020[73](index=73&type=chunk) [15. Subsequent Event](index=16&type=section&id=15.%20Subsequent%20Event) Subsequent events, including extended forbearance agreements and the Transaction Support Agreement for debt restructuring, are detailed - Forbearance Agreements with lenders were extended until September 26, 2020, addressing non-compliance with credit facility covenants[76](index=76&type=chunk)[77](index=77&type=chunk) - On September 1, 2020, the company entered into a Transaction Support Agreement (TSA) with term loan lenders and shareholders for a financial restructuring to waive past non-compliance and extend debt maturity by two years (through May 2024), aiming for an out-of-court or prepackaged Chapter 11 transaction[78](index=78&type=chunk)[79](index=79&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses J.Jill's financial condition and results, focusing on COVID-19's impact, company responses, liquidity, and restructuring [Overview](index=17&type=section&id=Overview) COVID-19's severe impact on Q1 and Q2 Fiscal Year 2020, cash preservation actions, and ongoing going concern doubts are highlighted - J.Jill's Q1 and Q2 Fiscal Year 2020 financial results were severely impacted by the COVID-19 pandemic, leading to temporary store closures and a focus on leveraging the Direct channel, cost management, and liquidity improvement[84](index=84&type=chunk) - The company drew **$33.0 million** from its ABL facility, implemented extended vendor payment terms, withheld store rent, and reduced expenses (pay cuts, furloughs, marketing cuts, reduced capital expenditures) to preserve cash[84](index=84&type=chunk) - Despite efforts, substantial doubt remains about the company's ability to continue as a going concern due to risks related to store performance, consumer resilience, potential COVID-19 resurgence, and the possibility of lenders calling debt due to covenant defaults[85](index=85&type=chunk) [Factors Affecting Our Operating Results](index=17&type=section&id=Factors%20Affecting%20Our%20Operating%20Results) Key factors influencing operating results include economic trends, consumer preferences, competition, and strategic initiatives - Key factors influencing operating results include overall economic trends (consumer spending), consumer preferences and fashion trends, intense retail competition, the ongoing implementation of strategic initiatives (e-commerce, information systems), pricing and merchandise mix changes, and potential changes in tax laws/regulations[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [How We Assess the Performance of Our Business](index=18&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) J.Jill assesses performance using GAAP and non-GAAP metrics like Net Sales, Gross Profit, SG&A, and Adjusted EBITDA - Performance is assessed using GAAP and non-GAAP metrics, including Net Sales (from Retail and Direct channels, impacted by customer base, product assortment, marketing, and omnichannel migration), Number of Stores, Gross Profit (net sales less cost of goods sold, affected by inventory shrinkage, markdowns, and raw material costs), Selling, General and Administrative Expenses (operating costs, payroll, occupancy, marketing, distribution), and Adjusted EBITDA[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) - Adjusted EBITDA is a non-GAAP measure used by management and investors to assess operating performance, planning, and forecasting, and is reconciled to net income[101](index=101&type=chunk)[102](index=102&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA and Calculation of Adjusted EBITDA Margin](index=19&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA%20and%20Calculation%20of%20Adjusted%20EBITDA%20Margin) Net income is reconciled to Adjusted EBITDA, and the Adjusted EBITDA margin is calculated for the reported periods Reconciliation of Net Income to Adjusted EBITDA and Calculation of Adjusted EBITDA Margin | Metric (in thousands) | 13 Weeks Ended Aug 1, 2020 | 13 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 1, 2020 | 26 Weeks Ended Aug 3, 2019 | | :------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net loss | $(19,034) | $(96,735) | $(89,303) | $(92,369) | | Adjusted EBITDA | $(6,460) | $12,585 | $(32,295) | $34,056 | | Net sales | $92,636 | $180,744 | $183,605 | $357,196 | | Adjusted EBITDA margin | (7.0)% | 7.0% | (17.6)% | 9.5% | - Adjusted EBITDA for the thirteen weeks ended August 1, 2020, was **$(6.5) million**, a significant decline from **$12.6 million** in the prior year, resulting in a negative Adjusted EBITDA margin of **(7.0)%**[104](index=104&type=chunk) - For the twenty-six weeks ended August 1, 2020, Adjusted EBITDA was **$(32.3) million**, down from **$34.1 million** in the prior year, with an Adjusted EBITDA margin of **(17.6)%**[104](index=104&type=chunk) [Items Affecting Comparability of Financial Results](index=20&type=section&id=Items%20Affecting%20Comparability%20of%20Financial%20Results) Factors affecting comparability include significant impairment charges and the pervasive impact of the COVID-19 pandemic - Fiscal Year 2020 year-to-date results include **$51.1 million** in impairment charges for long-lived assets, goodwill, and intangible assets, compared to **$97.5 million** in Q2 Fiscal Year 2019[106](index=106&type=chunk) - The COVID-19 pandemic significantly impacted Q2 and year-to-date Fiscal Year 2020 results due to temporary store closures, leading to revenue loss while still incurring expenses like payroll and rent, making comparisons to prior periods difficult[107](index=107&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) The company's operating results are analyzed, comparing key financial metrics for the thirteen and twenty-six week periods [Thirteen weeks ended August 1, 2020 Compared to Thirteen weeks ended August 3, 2019](index=20&type=section&id=Thirteen%20weeks%20ended%20August%201%2C%202020%20Compared%20to%20Thirteen%20weeks%20ended%20August%203%2C%202019) Financial performance for the thirteen-week periods is compared, highlighting changes in net sales, gross profit, and operating loss Financial Performance (13 Weeks) | Metric (in thousands) | Aug 1, 2020 | Aug 3, 2019 | $ Change | % Change | | :------------------------------------ | :---------- | :---------- | :--------- | :--------- | | Net sales | $92,636 | $180,744 | $(88,108) | (48.7)% | | Gross profit | $55,020 | $105,341 | $(50,321) | (47.8)% | | Gross margin | 59.4% | 58.3% | 1.1% | 1.9% | | Selling, general and administrative expenses | $77,737 | $102,634 | $(24,897) | (24.3)% | | Operating loss | $(21,824) | $(94,785) | $72,961 | (77.0)% | | Net loss | $(19,034) | $(96,735) | $77,701 | (80.3)% | - Net sales decreased by **48.7%** due to temporary store closures. The Direct channel's contribution to net sales increased from **42.6%** to **71.6%**[109](index=109&type=chunk)[110](index=110&type=chunk) - Gross margin improved to **59.4%** from **58.3%**, primarily due to a **$2.4 million** change in estimate to reduce an accrual for potential future product liabilities, offsetting higher promotions and markdowns[111](index=111&type=chunk) - Selling, general and administrative expenses decreased by **24.3%** due to expense reduction actions (headcount, pay reductions, lower store payroll, reduced marketing costs)[112](index=112&type=chunk) [Twenty-six weeks ended August 1, 2020 Compared to Twenty-six weeks ended August 3, 2019](index=21&type=section&id=Twenty-six%20weeks%20ended%20August%201%2C%202020%20Compared%20to%20Twenty-six%20weeks%20ended%20August%203%2C%202019) Financial performance for the twenty-six-week periods is compared, detailing changes in net sales, gross profit, and operating loss Financial Performance (26 Weeks) | Metric (in thousands) | Aug 1, 2020 | Aug 3, 2019 | $ Change | % Change | | :------------------------------------ | :---------- | :---------- | :--------- | :--------- | | Net sales | $183,605 | $357,196 | $(173,591) | (48.6)% | | Gross profit | $105,185 | $221,597 | $(116,412) | (52.5)% | | Gross margin | 57.3% | 62.0% | (4.7)% | (7.6)% | | Selling, general and administrative expenses | $165,645 | $208,079 | $(42,434) | (20.4)% | | Operating loss | $(111,567) | $(83,974) | $(27,593) | 32.9% | | Net loss | $(89,303) | $(92,369) | $3,066 | (3.3)% | - Net sales decreased by **48.6%** due to prolonged store closures. The Direct channel's contribution to net sales increased from **42.3%** to **66.6%**[117](index=117&type=chunk)[118](index=118&type=chunk) - Gross margin declined to **57.3%** from **62.0%**, primarily due to increased promotions, markdowns, liquidation actions, and a **$3.0 million** accrual for vendor order cancellation liabilities[119](index=119&type=chunk) - Selling, general and administrative expenses decreased by **20.4%** due to expense reduction actions, but as a percentage of net sales, they increased to **90.2%** from **58.3%** due to the significant revenue decrease[120](index=120&type=chunk)[121](index=121&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity and capital resources are discussed, emphasizing COVID-19 impact, going concern doubts, and debt covenant non-compliance - The COVID-19 pandemic has materially adversely impacted liquidity, leading to substantial doubt about the company's ability to continue as a going concern and potential acceleration of debt due to covenant non-compliance[124](index=124&type=chunk)[128](index=128&type=chunk) - Primary liquidity sources are cash from operations and the ABL Facility. The company borrowed **$33.0 million** under the ABL Facility in March 2020[125](index=125&type=chunk)[126](index=126&type=chunk) - Capital expenditures decreased to **$2.7 million** for the twenty-six weeks ended August 1, 2020, from **$7.9 million** in the prior year, reflecting efforts to reduce cash expenditures[133](index=133&type=chunk) [Cash Flow Analysis](index=24&type=section&id=Cash%20Flow%20Analysis) Cash flows from operating, investing, and financing activities are analyzed for the twenty-six-week periods Cash Flow Activity | Cash Flow Activity (in thousands) | 26 Weeks Ended Aug 1, 2020 | 26 Weeks Ended Aug 3, 2019 | | :-------------------------------- | :------------------------- | :------------------------- | | Net cash (used in) provided by operating activities | $(17,340) | $23,536 | | Net cash used in investing activities | $(2,675) | $7,904 | | Net cash provided by (used in) financing activities | $30,250 | $(52,712) | - Operating cash flow shifted from a **$23.5 million** source to a **$17.3 million** use, primarily due to COVID-19 impacts, partially offset by working capital improvements from deferred rent and extended vendor payment terms[135](index=135&type=chunk)[136](index=136&type=chunk) - Financing activities provided **$30.3 million** in cash, driven by ABL Facility borrowings, a reversal from the prior year's **$52.7 million** use due to a special dividend[139](index=139&type=chunk) [Dividends](index=24&type=section&id=Dividends) Past dividend payments and future dividend policy, subject to board discretion and debt restrictions, are detailed - On April 1, 2019, the company paid a special cash dividend of **$50.2 million**. Future dividend payments are at the discretion of the board and subject to earnings, capital requirements, and debt agreement restrictions[140](index=140&type=chunk)[141](index=141&type=chunk) [Credit Facilities](index=25&type=section&id=Credit%20Facilities) Details on the ABL Facility, including outstanding balances, letters of credit, and additional borrowing capacity, are provided ABL Facility | ABL Facility (in thousands) | August 1, 2020 | February 1, 2020 | | :-------------------------- | :------------- | :--------------- | | Outstanding balance | $31,800 | $— | | Outstanding letters of credit | $2,700 | $1,700 | | Maximum additional borrowing capacity | $5,500 | $38,300 | [Contractual Obligations](index=25&type=section&id=Contractual%20Obligations) Contractual obligations, including debt and leases, and the risk of debt acceleration from covenant non-compliance, are outlined - Contractual obligations include debt, interest, operating leases, and purchase orders. Non-compliance with covenants due to COVID-19 could lead to lenders accelerating debt, potentially resulting in a Chapter 11 filing if waivers are not obtained[143](index=143&type=chunk)[144](index=144&type=chunk) [Contingencies](index=25&type=section&id=Contingencies) Legal proceedings and other contingencies are addressed, with no material adverse effects anticipated - The company is involved in various legal proceedings but does not anticipate any material adverse effects on its business, financial condition, operating results, or cash flows[145](index=145&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) The company confirms it is not a party to any off-balance sheet arrangements - The company is not a party to any off-balance sheet arrangements[146](index=146&type=chunk) [Critical Accounting Policies and Significant Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Estimates) Critical accounting estimates, including revenue recognition, inventory valuation, and impairment assessments, are identified - Critical accounting estimates involve revenue recognition (gift card breakage, merchandise returns), inventory valuation, impairment assessments for goodwill, intangible assets, and long-lived assets, and equity-based compensation expense[147](index=147&type=chunk) [Recent Accounting Pronouncements](index=25&type=section&id=Recent%20Accounting%20Pronouncements) The adoption of recent accounting pronouncements and their expected impact on financial statements are discussed - The company adopted ASU 2018-18 (Collaborative Arrangements) with no material impact and expects ASU 2019-12 (Income Tax Accounting) to have no material impact upon adoption in Q1 Fiscal Year 2021[31](index=31&type=chunk)[32](index=32&type=chunk)[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) J.Jill's exposure to market risks, specifically interest rate risk from variable-rate debt and inflation impact, is discussed [Interest Rate Risk](index=27&type=section&id=Interest%20Rate%20Risk) The company's exposure to interest rate risk from variable-rate borrowings under its Term Loan and ABL Facility is detailed - The company is exposed to interest rate risk from variable-rate borrowings under its Term Loan and ABL Facility. As of August 1, 2020, **$31.8 million** was outstanding under the ABL Facility and **$236.2 million** under the Term Loan[154](index=154&type=chunk) - A **10%** change in the current interest rate would affect net income by **$1.2 million** during Fiscal Year 2020[154](index=154&type=chunk) [Impact of Inflation](index=27&type=section&id=Impact%20of%20Inflation) The impact of inflation on operations and financial condition is assessed, noting it has been immaterial to date - The effects of inflation on the company's results of operations and financial condition have been immaterial to date, though future impacts cannot be assured[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) J.Jill's disclosure controls and internal control effectiveness are addressed, noting a material weakness in impairment accounting and remediation [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in goodwill and tradename impairment - Management concluded that disclosure controls and procedures were not effective as of August 1, 2020[158](index=158&type=chunk) - This ineffectiveness is due to a material weakness in internal control over financial reporting related to the design and maintenance of controls for goodwill and tradename impairment accounting, specifically the review of carrying values[157](index=157&type=chunk)[158](index=158&type=chunk) [Changes to Internal Control over Financial Reporting](index=27&type=section&id=Changes%20to%20Internal%20Control%20over%20Financial%20Reporting) No significant changes to internal control over financial reporting occurred, apart from the remediation plan for the weakness - No significant changes to internal control over financial reporting occurred during the fiscal quarter ended August 1, 2020, other than those related to the remediation plan for the identified material weakness[159](index=159&type=chunk) [Remediation Plan](index=27&type=section&id=Remediation%20Plan) Management's active remediation plan strengthens internal controls for goodwill and tradename impairment accounting - Management is actively implementing a remediation plan to strengthen internal processes and controls for goodwill and tradename impairment accounting, aiming to fully remediate the material weakness[160](index=160&type=chunk) [Limitations on the Effectiveness of Controls and Procedures](index=28&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls%20and%20Procedures) Controls provide only reasonable assurance due to inherent limitations like resource constraints and judgment - Controls and procedures provide only reasonable, not absolute, assurance due to inherent limitations such as resource constraints, judgment in design, and assumptions about future events[162](index=162&type=chunk) [Special Note Regarding Forward-Looking Statements](index=26&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements, subject to known and unknown risks, including financial restructuring, COVID-19 impact, and going concern status [Special Note Regarding Forward-Looking Statements](index=26&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section reiterates the cautionary note on forward-looking statements, highlighting inherent risks and uncertainties that could alter actual results - The report contains forward-looking statements identified by terms like 'anticipate,' 'believe,' 'expect,' and 'plan,' which are not historical facts but reflect future operations, financial position, and market growth[150](index=150&type=chunk) - Actual results may differ materially due to known and unknown risks, including the company's ability to complete the financial restructuring, comply with the TSA, manage the COVID-19 pandemic's impact, and resolve substantial doubt about its going concern status[151](index=151&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which reflect estimates and assumptions only as of the report date, and the company undertakes no obligation to update them[152](index=152&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) Other required information, including legal proceedings, risk factors, equity sales, defaults, and exhibits, is provided [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) J.Jill is involved in ordinary course legal proceedings, with no anticipated material adverse effect on financials or operations - The company is subject to various legal proceedings in the ordinary course of business[165](index=165&type=chunk) - Management does not believe that the resolution of these proceedings will have a material adverse effect on the company's business, financial condition, operating results, or cash flows[165](index=165&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) Risk factors are updated, focusing on COVID-19's severe impact, pandemic uncertainty, and credit covenant non-compliance - The COVID-19 pandemic has had a material adverse effect on J.Jill's business, liquidity, financial condition, and results of operations, with significant uncertainty regarding its duration, economic impact, and potential 'second waves'[167](index=167&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) - The company is currently in non-compliance with financial covenants in its Term Loan and ABL Facility due to COVID-19 related store closures and the going concern disclosure[171](index=171&type=chunk)[173](index=173&type=chunk) - Forbearance agreements with lenders, extended until September 26, 2020, temporarily prevent lenders from exercising remedies, but failure to maintain compliance or secure a long-term solution could result in debt acceleration[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds are reported for the period - There were no unregistered sales of equity securities and no use of proceeds to report[174](index=174&type=chunk) [Item 3. Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities are reported for the period - There were no defaults upon senior securities[175](index=175&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to J.Jill, Inc.'s operations - This item is not applicable[176](index=176&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) No other information is reported for the period - There is no other information to report[177](index=177&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) All exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, forbearance agreements, and certifications, are listed - The exhibits include corporate documents (Certificate of Incorporation, Bylaws), multiple Forbearance Agreements (dated June 15, 2020, through August 31, 2020), the Transaction Support Agreement (dated August 31, 2020), and certifications by the Principal Executive and Financial Officers[178](index=178&type=chunk)[181](index=181&type=chunk) [Signatures](index=32&type=section&id=Signatures) The report is signed by J.Jill's Interim CEO and CFO, attesting to its filing - The report is signed by James Scully, Interim Chief Executive Officer, and Mark Webb, Executive Vice President and Chief Financial Officer, on September 10, 2020[184](index=184&type=chunk)[185](index=185&type=chunk)