Shares of J.Jill (JILL) have gained 9.6% over the past four weeks to close the last trading session at $28.30, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $36 indicates a potential upside of 27.2%.The average comprises three short-term price targets ranging from a low of $32 to a high of $38, with a standard deviation of $3.46. While the lowest estimate indicates an increase ...

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section advises that the report contains forward-looking statements subject to risks and uncertainties, with no obligation to update - This Annual Report contains forward-looking statements, identified by terms like "anticipate," "believe," "expect," etc., primarily in "Item 1. Business," "Item 1A. Risk Factors," and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations"[13](index=13&type=chunk) - Actual results may differ materially from forward-looking statements due to known and unknown risks, uncertainties, and important factors, including those detailed in "Item 1A. Risk Factors"[13](index=13&type=chunk) - The company undertakes no obligation to update or review publicly any forward-looking statements, except as required by law[13](index=13&type=chunk) [Risk Factor Summary](index=4&type=section&id=RISK%20FACTOR%20SUMMARY) This section summarizes key risks related to business, debt, governance, information security, labor, intellectual property, and compliance [Risks Related to Our Business, Industry and Strategy](index=4&type=section&id=Risks%20Related%20to%20Our%20Business,%20Industry%20and%20Strategy) This section outlines key risks related to J.Jill's business, industry, and strategic operations - The business is sensitive to macroeconomic conditions and consumer discretionary spending, which can be adversely affected by economic downturns, pandemics, and other public health crises[15](index=15&type=chunk)[17](index=17&type=chunk) - Key risks include the ability to identify and respond to new and changing customer preferences, maintain and enhance a strong brand image, and acquire new customers cost-effectively[17](index=17&type=chunk) - Operational challenges involve successfully optimizing omnichannel operations, increasing customer traffic to the website, and profitably managing the opening and closing of retail stores, especially given reductions in mall traffic[17](index=17&type=chunk) [Risks Related to Our Indebtedness](index=5&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) This section highlights risks associated with the company's debt, including restrictions, cash generation, and debt maturity dates - The company's level of indebtedness and the terms of its credit agreements restrict operational and financial flexibility, potentially affecting the ability to respond to business changes and fund obligations[19](index=19&type=chunk) - Dependence on long-term leases, which are subject to future increases in occupancy costs, and the ability to renew leases on favorable terms or at all, pose financial risks[19](index=19&type=chunk) [Risks Related to Our Operations Governance Structure and Common Stock](index=5&type=section&id=Risks%20Related%20to%20Our%20Operations%20Governance%20Structure%20and%20Common%20Stock) This section covers risks related to the company's governance structure and common stock, including NYSE compliance and stock price volatility - Risks include maintaining compliance with NYSE listing requirements, the implications of being a controlled company, and potential conflicts of interest arising from the relationship with TowerBrook Capital Partners LP[19](index=19&type=chunk) - The volatility of the company's stock price and the potential impact of future sales of common stock are significant concerns[19](index=19&type=chunk) [Risks Related to Information Security](index=5&type=section&id=Risks%20Related%20to%20Information%20Security) This section addresses risks concerning information security, including securing personal data and IT system failures - The ability to secure the personal information of customers and employees and comply with applicable security standards is a critical risk[19](index=19&type=chunk) - Privacy breaches at service providers or failure of information technology systems to support the growing business could damage reputation and operations[19](index=19&type=chunk) [Risks Related to Labor Force](index=5&type=section&id=Risks%20Related%20to%20Labor%20Force) This section outlines risks related to the labor force, including dependence on key management, talent retention, and increased labor costs - Dependence upon key executive management and the inability to hire or retain required talent could harm the business[19](index=19&type=chunk) - Labor organizing activities and increased labor costs, including wages, may negatively impact financial results[19](index=19&type=chunk) [Risks Related to Intellectual Property](index=5&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This section details risks associated with intellectual property, including trademark protection and potential infringement - The ability to protect trademarks and other intellectual property rights is crucial for the business[19](index=19&type=chunk) - There is a risk of infringement on the intellectual property of third parties, which could lead to legal challenges[19](index=19&type=chunk) [Risks Related to Legal, Regulatory, Accounting and Compliance Matters](index=5&type=section&id=Risks%20Related%20to%20Legal,%20Regulatory,%20Accounting%20and%20Compliance%20Matters) This section covers risks related to legal, regulatory, accounting, and compliance matters, including impairment charges and internal controls - Potential impairment charges for goodwill, indefinite-lived intangible assets, or other long-lived assets could adversely affect operating results[19](index=19&type=chunk) - Maintaining adequate internal controls over financial and management systems is essential[19](index=19&type=chunk) - The business is impacted by governmental laws and regulations and the outcomes of legal proceedings[19](index=19&type=chunk) [PART I](index=6&type=section&id=PART%20I) [Business Overview](index=6&type=section&id=Item%201.%20Business) J.Jill is a national lifestyle brand offering apparel, footwear, and accessories, primarily targeting women 45 and older - J.Jill is a national lifestyle brand providing apparel, footwear, and accessories, operating on a 52- or 53-week fiscal year; Fiscal Year 2023 comprised **53 weeks**[21](index=21&type=chunk)[22](index=22&type=chunk) - The brand targets women typically **45 years and older**, college-educated, with an approximate median annual household income of **$150,000**, and an industry-leading average tenure of **10+ years**[24](index=24&type=chunk) - Omnichannel customers comprised approximately **23%** of J.Jill's active customer base for Fiscal Year 2023, up from **22%** in Fiscal Years 2022 and 2021, and tend to spend **three times more** than single-channel customers[25](index=25&type=chunk)[196](index=196&type=chunk) - Products are marketed under the J.Jill brand name and sold through its ecommerce platform and catalog ("Direct") and retail stores ("Retail"), available in Regular, Petite, Tall, and extended sizes (XS to 2X in-store, 4X online)[26](index=26&type=chunk) - J.Jill offers three sub-brands: Pure Jill (understated ease, fabric-first), Wearever (refined dressing for work/travel/home), and Fit (performance-inspired apparel for wellness/loungewear)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - Substantially all merchandise is designed in-house, with newness introduced through nine separate seasons, different fabrics, colors, patterns, silhouettes, and staggered deliveries from sub-brands[31](index=31&type=chunk) | Channel | % of Total Net Sales (FY2023) | | :------ | :---------------------------- | | Retail | 53% | | Direct | 47% | - As of February 3, 2024, J.Jill operated **244 stores** across **42 states**, with approximately half in lifestyle centers and half in premium malls, averaging **3,700 square feet**[33](index=33&type=chunk) | Store Open Year | Stores Opened | Stores Closed | Total Stores at the End of the Fiscal Year | | :-------------- | :------------ | :------------ | :----------------------------------------- | | Fiscal Year 2019 | 11 | (6) | 287 | | Fiscal Year 2020 | — | (20) | 267 | | Fiscal Year 2021 | — | (14) | 253 | | Fiscal Year 2022 | 1 | (11) | 243 | | Fiscal Year 2023 | 2 | (1) | 244 | - The Direct channel consists of the website (approximately **95% of Direct net sales**) and catalog orders (**5%**), offering a broader range of colors and sizes online[38](index=38&type=chunk)[39](index=39&type=chunk) - Competitive strengths include a distinct, well-recognized brand, an omnichannel business model, a data-centric approach (matching ~**97% of transactions** to identifiable customers), an affluent and loyal customer base, a customer-focused product assortment, and a highly experienced leadership team[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - Key growth strategies include growing the value of the customer base (attracting new, reactivating lapsed, retaining existing), increasing Direct sales through website enhancements, profitably expanding the store base (target net **20-25 new stores in 3-5 years**), strengthening omnichannel capabilities, and enhancing product assortment (including sub-brands and inclusive sizing)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Marketing and advertising leverage print mailings, email, digital ads, and public relations, optimized using a customer database; catalogs remain an integral part of the business[52](index=52&type=chunk)[54](index=54&type=chunk) - A private label credit card program, in agreement with Comenity Capital Bank, drives customer loyalty and encourages shopping, with **46% of gross sales** in Fiscal Year 20

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) [Overall Performance & Strategic Initiatives](index=1&type=section&id=Overall%20Performance%20%26%20Strategic%20Initiatives) J.Jill, Inc. exceeded expectations in Q4 and full-year FY23, driven by a disciplined operating model supporting healthy margins and strong cash generation, while strategically investing for future profitable growth - Q4 and full-year FY23 results **exceeded expectations**, attributed to a disciplined operating model[2](index=2&type=chunk) - Key strategic advancements in 2023 included successful **debt refinancing**, enhanced omnichannel capabilities, the first net new store openings in three years, and continuous testing of new product concepts for growth[2](index=2&type=chunk) - The company maintains a **cautious outlook** on the macroeconomic environment, planning to execute its operating model and invest in capital and operating expenditures to support profitable sales growth[2](index=2&type=chunk) Key Financial Highlights for Q4 and Full Year Fiscal 2023 | Metric | Q4 FY23 | Q4 FY22 | FY23 | FY22 | | :--------------------- | :------ | :------ | :----- | :----- | | Net Sales (Millions USD) | 149.4 | 147.7 | 604.7 | 615.3 | | Gross Margin (%) | 67.3% | 64.4% | 70.7% | 68.6% | | Operating Margin (%) | 7.0% | 5.3% | 14.2% | 12.8% | [Fourth Quarter Fiscal 2023 Financial Review](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202023%20Financial%20Review) [Q4 FY23 Key Financial Metrics](index=1&type=section&id=Q4%20FY23%20Key%20Financial%20Metrics) J.Jill achieved net sales and gross margin growth in Q4 FY23, with significant improvements in operating and net income, despite a decline in total company comparable sales, driven by strong DTC net sales Q4 FY23 Financial Performance (14 Weeks Ended Feb 3, 2024 vs 13 Weeks Ended Jan 28, 2023) | Metric | Q4 FY23 (Millions USD) | Q4 FY22 (Millions USD) | Change | | :--------------------------------- | :----------------- | :----------------- | :----- | | Total Net Sales | 149.4 | 147.7 | +1.2% | | Total Company Comparable Sales | -3.6% | N/A | -3.6% | | Direct-to-Consumer (DTC) Net Sales as % of Total | 51.2% | N/A | N/A | | Direct-to-Consumer (DTC) Net Sales Growth | +4.0% | N/A | +4.0% | | Gross Profit | 100.6 | 95.1 | +5.8% | | Gross Margin | 67.3% | 64.4% | +2.9pp | | Selling, General & Administrative Expenses (SG&A) | 90.0 | 87.3 | +3.1% | | Operating Income | 10.5 | 7.8 | +34.6% | | Operating Income Margin | 7.0% | 5.3% | +1.7pp | | Net Income | 4.8 | 1.0 | +380% | | Diluted Earnings Per Share | 0.33 | 0.07 | +371% | | Adjusted EBITDA | 17.6 | 15.0 | +17.3% | | Adjusted EBITDA Margin | 11.8% | 10.2% | +1.6pp | - The fourth quarter included an extra 53rd week, contributing approximately **$7.9 million to net sales** and **$2.2 million to Adjusted EBITDA**[6](index=6&type=chunk) [Full Year Fiscal 2023 Financial Review](index=2&type=section&id=Full%20Year%20Fiscal%202023%20Financial%20Review) [FY23 Key Financial Metrics](index=2&type=section&id=FY23%20Key%20Financial%20Metrics) J.Jill's full-year FY23 saw a slight decline in net sales, yet improved gross and operating margins, alongside increased Adjusted EBITDA, reflecting enhanced cost control and robust core business performance Full Year FY23 Financial Performance (53 Weeks Ended Feb 3, 2024 vs 52 Weeks Ended Jan 28, 2023) | Metric | FY23 (Millions USD) | FY22 (Millions USD) | Change | | :--------------------------------- | :-------------- | :-------------- | :----- | | Total Net Sales | 604.7 | 615.3 | -1.7% | | Total Company Comparable Sales | -1.4% | N/A | -1.4% | | Direct-to-Consumer (DTC) Net Sales as % of Total | 46.5% | N/A | N/A | | Direct-to-Consumer (DTC) Net Sales Growth | -2.3% | N/A | -2.3% | | Gross Profit | 427.4 | 422.1 | +1.3% | | Gross Margin | 70.7% | 68.6% | +2.1pp | | Selling, General & Administrative Expenses (SG&A) | 341.2 | 341.9 | -0.2% | | Operating Income | 86.1 | 78.7 | +9.4% | | Operating Income Margin | 14.2% | 12.8% | +1.4pp | | Net Income | 36.2 | 42.2 | -14.2% | | Diluted Earnings Per Share | 2.51 | 2.95 | -14.9% | | Adjusted Diluted Earnings Per Share | 3.13 | 3.01 | +4.0% | | Adjusted EBITDA | 112.2 | 109.4 | +2.6% | | Adjusted EBITDA Margin | 18.6% | 17.8% | +0.8pp | [Balance Sheet and Cash Flow Highlights](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow%20Highlights) In FY23, J.Jill experienced a decrease in cash flow from operating activities and free cash flow, while maintaining a cash balance of **$62.2 million** at year-end, with stable store count and a slight increase in inventory Key Balance Sheet and Cash Flow Metrics for FY23 | Metric | FY23 (Millions USD) | FY22 (Millions USD) | | :--------------------- | :-------------- | :-------------- | | Cash Flow from Operating Activities | 63.3 | 74.4 | | Free Cash Flow | 46.4 | 59.4 | | Cash Balance at Period End | 62.2 | 87.1 | | Inventory at Period End | 53.3 | 50.6 | - In FY23, the company opened **2 new stores** and closed **1 store**, ending the year with a total of **244 stores**[7](index=7&type=chunk) [Business Outlook](index=4&type=section&id=Business%20Outlook) [Fiscal Year 2024 Guidance](index=4&type=section&id=Fiscal%20Year%202024%20Guidance) J.Jill anticipates flat to low single-digit net sales growth for FY24, with a mid single-digit decline in Adjusted EBITDA, primarily due to the negative impact of the 53rd week in FY23, alongside planned capital expenditures of approximately **$26 million** and net store growth of up to five locations Full Year FY24 Performance Guidance | Metric | FY24 Outlook | | :--------------------- | :--------------------------------- | | Net Sales | Flat to Low Single-Digit Growth (vs 53-week FY23) | | Adjusted EBITDA | Mid Single-Digit Decline (vs 53-week FY23) | | Capital Expenditures | Approximately $26 Million USD | | Net Store Growth | Up to 5 Stores | - The FY24 guidance reflects the negative impact of **$7.9 million in net sales** and **$2.2 million in Adjusted EBITDA** from the 53rd week in FY23[9](index=9&type=chunk) [First Quarter Fiscal 2024 Guidance](index=4&type=section&id=First%20Quarter%20Fiscal%202024%20Guidance) J.Jill projects low to mid single-digit net sales growth for Q1 FY24, with Adjusted EBITDA expected to range between **$29 million and $33 million** Q1 FY24 Performance Guidance | Metric | Q1 FY24 Outlook | | :--------------------- | :--------------------------------- | | Net Sales | Low to Mid Single-Digit Growth (vs Q1 FY23) | | Adjusted EBITDA | $29 Million to $33 Million USD | [Company Information & Investor Relations](index=4&type=section&id=Company%20Information%20%26%20Investor%20Relations) [About J.Jill, Inc.](index=4&type=section&id=About%20J.Jill%2C%20Inc.) J.Jill is a national lifestyle brand offering apparel, footwear, and accessories designed to help customers navigate life with ease, embodying a "keep it simple, focus on substance" philosophy through over 200 stores and a robust e-commerce platform - J.Jill is a national lifestyle brand offering apparel, footwear, and accessories, designed to help customers navigate life with ease[13](index=13&type=chunk) - The brand's core philosophy is "keep it simple, focus on substance," providing a high-touch customer experience through over **200 stores** and an e-commerce platform[13](index=13&type=chunk) [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) J.Jill hosted a conference call on March 20, 2024, at 8:00 AM ET to discuss its Q4 and full-year FY23 results, with a replay available via phone and the company's investor website - A conference call was held on **March 20, 2024, at 8:00 AM ET** to discuss Q4 and full-year FY23 results[11](index=11&type=chunk) - A replay of the conference call is accessible via phone and the company's investor website, valid until **March 27, 2024**[12](index=12&type=chunk) [Investor Contacts](index=17&type=section&id=Investor%20Contacts) J.Jill provides contact information for investor relations, business and financial media, and brand media for communication and inquiries - Investor Relations contact: Caitlin Churchill (ICR, Inc.), email: investors@jjill.com, phone: **203-682-8200**[44](index=44&type=chunk) - Business and Financial Media contact: Ariel Kouvaras (Sloane & Company), email: akouvaras@sloanepr.com, phone: **973-897-6241**[44](index=44&type=chunk) - Brand Media contact: Meredith Schwenk (J.Jill, Inc.), email: media@jjill.com, phone: **617-376-4399**[44](index=44&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) [Definitions and Rationale for Non-GAAP Measures](index=4&type=section&id=Definitions%20and%20Rationale%20for%20Non-GAAP%20Measures) J.Jill utilizes non-GAAP financial measures like Adjusted EBITDA, Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow to supplement GAAP statements, providing a more comparable view of operating performance and liquidity by excluding non-recurring items - Adjusted EBITDA: Represents net income adjusted for interest expense, income tax (benefit) provision, depreciation and amortization, share-based compensation expense, fixed asset write-offs, retail store exit costs, loss on debt refinancing, impairment of long-lived assets, and other non-recurring items[14](index=14&type=chunk) - Adjusted Income from Operations: Represents operating income adjusted for retail store exit costs, impairment of long-lived assets, and other non-recurring items[14](index=14&type=chunk)[15](index=15&type=chunk) - Adjusted Net Income: Represents net income adjusted for income tax (benefit) provision, retail store exit costs, loss on debt refinancing, impairment of long-lived assets, and other non-recurring items[17](index=17&type=chunk) - Free Cash Flow: Represents cash flow from operating activities less capital expenditures[17](index=17&type=chunk) - The company believes these non-GAAP measures aid in business evaluation but have limitations and should not be considered substitutes or sole measures for GAAP metrics[16](index=16&type=chunk) [Forward-Looking Statements Disclaimer](index=7&type=section&id=Forward-Looking%20Statements%20Disclaimer) This press release contains forward-looking statements regarding the company's future operations, financial condition, revenue, costs, plans, and market growth, which are subject to risks and uncertainties that may cause actual results to differ materially from expectations, and investors are cautioned not to place undue reliance on them - This press release contains forward-looking statements concerning the company's future operations, financial condition, revenue, costs, plans, and market growth[18](index=18&type=chunk) - Forward-looking statements are based on current expectations and assumptions but are subject to various risks and uncertainties that could cause actual results to differ materially from expectations[18](index=18&type=chunk) - The company cautions investors not to place undue reliance on these statements and assumes no obligation to publicly update or revise any forward-looking statements[18](index=18&type=chunk) [Consolidated Financial Statements & Reconciliations](index=8&type=section&id=Consolidated%20Financial%20Statements%20%26%20Reconciliations) [Consolidated Statements of Operations and Comprehensive Income (Q4 FY23)](index=8&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Q4%20FY23%29) This section provides detailed GAAP data for J.Jill's consolidated statements of operations and comprehensive income for Q4 FY23 (14 weeks ended February 3, 2024) compared to Q4 FY22 (13 weeks ended January 28, 2023) Consolidated Statements of Operations and Comprehensive Income (Q4 FY23) | Metric (Thousands USD) | 14 Weeks Ended Feb 3, 2024 | 13 Weeks Ended Jan 28, 2023 | | :--------------------------------- | :---------------------- | :---------------------- | | Net Sales | 149,447 | 147,652 | | Cost of Goods Sold | 48,838 | 52,562 | | Gross Profit | 100,609 | 95,090 | | Selling, General & Administrative Expenses | 90,000 | 87,279 | | Impairment of Long-Lived Assets | 123 | 5 | | Operating Income | 10,486 | 7,806 | | Net Interest Expense | 5,901 | 4,393 | | Net Interest Expense to Related Parties | — | 1,291 | | Income Before Income Taxes | 4,585 | 2,122 | | Income Tax (Benefit) Provision | (182) | 1,086 | | Net Income and Comprehensive Income | 4,767 | 1,036 | | Diluted Earnings Per Share | 0.33 | 0.07 | [Consolidated Statements of Operations and Comprehensive Income (Full Year FY23)](index=9&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Full%20Year%20FY23%29) This section presents detailed GAAP data for J.Jill's consolidated statements of operations and comprehensive income for full-year FY23 (53 weeks ended February 3, 2024) compared to full-year FY22 (52 weeks ended January 28, 2023) Consolidated Statements of Operations and Comprehensive Income (Full Year FY23) | Metric (Thousands USD) | 53 Weeks Ended Feb 3, 2024 | 52 Weeks Ended Jan 28, 2023 | | :--------------------------------- | :---------------------- | :---------------------- | | Net Sales | 604,661 | 615,268 | | Cost of Goods Sold | 177,261 | 193,218 | | Gross Profit | 427,400 | 422,050 | | Selling, General & Administrative Expenses | 341,161 | 341,903 | | Impairment of Long-Lived Assets | 189 | 1,413 | | Operating Income | 86,050 | 78,734 | | Loss on Debt Refinancing | 12,702 | — | | Net Interest Expense | 22,909 | 15,946 | | Net Interest Expense to Related Parties | 1,074 | 4,114 | | Income Before Income Taxes | 49,365 | 58,674 | | Income Tax Provision | 13,164 | 16,499 | | Net Income and Comprehensive Income | 36,201 | 42,175 | | Diluted Earnings Per Share | 2.51 | 2.95 | [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) This section provides J.Jill's consolidated balance sheets as of February 3, 2024, and January 28, 2023, detailing the company's GAAP assets, liabilities, and stockholders' equity Consolidated Balance Sheets (Thousands USD) | Metric | Feb 3, 2024 | Jan 28, 2023 | | :------------------------- | :----------- | :----------- | | **Assets** | | | | Cash and Cash Equivalents | 62,172 | 87,053 | | Inventory, Net | 53,259 | 50,585 | | Total Current Assets | 138,129 | 159,901 | | Property and Equipment, Net | 54,118 | 53,497 | | Intangible Assets, Net | 66,246 | 73,188 | | Goodwill | 59,697 | 59,697 | | Operating Lease Assets, Net | 108,203 | 119,118 | | **Liabilities and Stockholders' Equity (Deficit)** | | | | Accounts Payable | 41,112 | 39,306 | | Current Portion of Long-Term Debt | 35,353 | 3,424 | | Total Current Liabilities | 154,952 | 126,987 | | Long-Term Debt, Net | 120,595 | 195,517 | | Deferred Income Taxes | 10,967 | 10,059 | | Operating Lease Liabilities, Net | 103,070 | 123,101 | | Total Stockholders' Equity (Deficit) | 37,218 | (219) | | Total Liabilities and Stockholders' Equity | 428,180 | 466,417 | - As of February 3, 2024, the company expects to pay **$26.6 million** in mandatory excess cash flow payments under its term loan credit agreement, included in "Current Portion of Long-Term Debt"[27](index=27&type=chunk) [Selected Cash Flow Information](index=16&type=section&id=Selected%20Cash%20Flow%20Information) This section provides selected cash flow information for J.Jill for full-year FY23 (53 weeks ended February 3, 2024) and full-year FY22 (52 weeks ended January 28, 2023), detailing cash flows from operating, investing, and financing activities Summary Cash Flow Data (Thousands USD) | Metric | 53 Weeks Ended Feb 3, 2024 | 52 Weeks Ended Jan 28, 2023 | | :------------------------- | :---------------------- | :---------------------- | | Net Cash Provided by Operating Activities | 63,313 | 74,425 | | Net Cash Used in Investing Activities | (16,934) | (15,067) | | Net Cash Used in Financing Activities | (71,260) | (8,262) | | Net Change in Cash and Cash Equivalents | (24,881) | 51,096 | | Cash and Cash Equivalents at End of Period | 62,172 | 87,053 | [Reconciliation of GAAP Net Income to Adjusted EBITDA](index=11&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20EBITDA) This section provides a reconciliation of J.Jill's GAAP net income to non-GAAP Adjusted EBITDA for Q4 and full-year FY23, detailing all adjustment items GAAP Net Income to Adjusted EBITDA Reconciliation (Thousands USD) | Metric | Q4 FY23 | Q4 FY22 | FY23 | FY22 | | :--------------------------------- | :------ | :------ | :----- | :----- | | Net Income | 4,767 | 1,036 | 36,201 | 42,175 | | Add: Depreciation and Amortization | 6,077 | 6,311 | 22,931 | 25,761 | | Add: Income Tax Provision | (182) | 1,086 | 13,164 | 16,499 | | Add: Net Interest Expense | 5,901 | 4,393 | 22,909 | 15,946 | | Add: Net Interest Expense to Related Parties | — | 1,291 | 1,074 | 4,114 | | Adjustments: Share-Based Compensation Expense | 1,005 | 890 | 3,762 | 3,505 | | Adjustments: Fixed Asset Write-Offs | 5 | 36 | 70 | 267 | | Adjustments: Loss on Debt Refinancing | — | — | 12,702 | — | | Adjustments: Retail Store Exit Costs | (135) | (4) | (767) | (250) | | Adjustments: Impairment of Long-Lived Assets | 123 | 5 | 189 | 1,413 | | Adjustments: Other Non-Recurring Items | — | 1 | 2 | 7 | | **Adjusted EBITDA** | **17,561** | **15,045** | **112,237** | **109,437** | | Adjusted EBITDA Margin | 11.8% | 10.2% | 18.6% | 17.8% | [Reconciliation of GAAP Operating Income to Adjusted Income from Operations](index=13&type=section&id=Reconciliation%20of%20GAAP%20Operating%20Income%20to%20Adjusted%20Income%20from%20Operations) This section provides a reconciliation of J.Jill's GAAP operating income to non-GAAP Adjusted Income from Operations for Q4 and full-year FY23, listing all adjustment items GAAP Operating Income to Adjusted Income from Operations Reconciliation (Thousands USD) | Metric | Q4 FY23 | Q4 FY22 | FY23 | FY22 | | :------------------------- | :------ | :------ | :----- | :----- | | Operating Income | 10,486 | 7,806 | 86,050 | 78,734 | | Adjustments: Retail Store Exit Costs | (135) | (4) | (767) | (250) | | Adjustments: Impairment of Long-Lived Assets | 123 | 5 | 189 | 1,413 | | Adjustments: Other Non-Recurring Items | — | 1 | 2 | 7 | | **Adjusted Income from Operations** | **10,474** | **7,808** | **85,474** | **79,904** | [Reconciliation of GAAP Net Income to Adjusted Net Income](index=14&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income) This section provides a reconciliation of J.Jill's GAAP net income to non-GAAP Adjusted Net Income for Q4 and full-year FY23, including the calculation of Adjusted Diluted Earnings Per Share GAAP Net Income to Adjusted Net Income Reconciliation (Thousands USD, except per share data) | Metric | Q4 FY23 | Q4 FY22 | FY23 | FY22 | | :--------------------------------- | :------ | :------ | :----- | :----- | | Net Income and Comprehensive Income | 4,767 | 1,036 | 36,201 | 42,175 | | Add: Income Tax (Benefit) Provision | (182) | 1,086 | 13,164 | 16,499 | | Income Before Income Taxes | 4,585 | 2,122 | 49,365 | 58,674 | | Adjustments: Loss on Debt Refinancing | — | — | 12,702 | — | | Adjustments: Retail Store Exit Costs | (135) | (4) | (767) | (250) | | Adjustments: Impairment of Long-Lived Assets | 123 | 5 | 189 | 1,413 | | Adjustments: Other Non-Recurring Items | — | 1 | 2 | 7 | | Adjusted Income Before Income Taxes | 4,573 | 2,124 | 61,491 | 59,844 | | Less: Adjusted Income Tax Provision | 1,221 | 597 | 16,418 | 16,816 | | **Adjusted Net Income** | **3,352** | **1,527** | **45,073** | **43,028** | | Adjusted Diluted Earnings Per Share | 0.23 | 0.11 | 3.13 | 3.01 | - Adjusted income tax provision is estimated using a tax rate of **26.7% for FY23** and **28.1% for FY22**; the Q4 FY23 income tax (benefit) provision reflects a benefit from the release of a state deferred tax asset valuation allowance, not included in the adjusted tax provision[38](index=38&type=chunk) [Reconciliation of GAAP Cash from Operations to Free Cash Flow](index=16&type=section&id=Reconciliation%20of%20GAAP%20Cash%20from%20Operations%20to%20Free%20Cash%20Flow) This section provides a reconciliation of J.Jill's GAAP cash flow from operating activities to non-GAAP Free Cash Flow for full-year FY23 GAAP Cash from Operations to Free Cash Flow Reconciliation (Thousands USD) | Metric | 53 Weeks Ended Feb 3, 2024 | 52 Weeks Ended Jan 28, 2023 | | :------------------------- | :---------------------- | :---------------------- | | Net Cash Provided by Operating Activities | 63,313 | 74,425 | | Less: Capital Expenditures | (16,934) | (15,067) | | **Free Cash Flow** | **46,379** | **59,358** | - Capital expenditures reflect net cash used in investing activities, including capitalized interest, but excluding cash received from landlord tenant allowances[42](index=42&type=chunk)

[PART I—FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for October 28, 2023, show decreased assets and debt, with Q3 net income rising to $11.6 million and YTD net income declining to $31.4 million due to a debt refinancing loss [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of October 28, 2023, total assets decreased to $438.0 million, primarily due to lower cash, while total liabilities significantly decreased to $406.4 million, leading to positive shareholders' equity of $31.7 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | October 28, 2023 | January 28, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $64,115 | $87,053 | | Inventories, net | $56,652 | $50,585 | | Total current assets | $143,606 | $160,820 | | Total assets | $438,048 | $466,417 | | **Liabilities & Equity** | | | | Total current liabilities | $136,004 | $126,987 | | Long-term debt, net | $148,731 | $205,236 | | Total liabilities | $406,390 | $466,636 | | Total shareholders' equity (deficit) | $31,658 | $(219) | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For Q3 2023, net sales were flat at $150.1 million, but net income rose to $11.6 million; for the thirty-nine weeks, net sales decreased 2.7% to $455.2 million, and net income fell to $31.4 million due to a $12.7 million debt refinancing loss Q3 Performance Comparison (in thousands, except per share data) | Metric | Thirteen Weeks Ended Oct 28, 2023 | Thirteen Weeks Ended Oct 29, 2022 | | :--- | :--- | :--- | | Net sales | $150,125 | $150,204 | | Gross profit | $107,842 | $105,023 | | Operating income | $22,127 | $18,850 | | Net income | $11,616 | $8,919 | | Diluted EPS | $0.80 | $0.62 | YTD Performance Comparison (in thousands, except per share data) | Metric | Thirty-Nine Weeks Ended Oct 28, 2023 | Thirty-Nine Weeks Ended Oct 29, 2022 | | :--- | :--- | :--- | | Net sales | $455,214 | $467,616 | | Loss on debt refinancing | $12,702 | $0 | | Net income | $31,434 | $41,139 | | Diluted EPS | $2.19 | $2.89 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the thirty-nine weeks ended October 28, 2023, net cash from operations decreased to $56.7 million, while net cash used in investing and financing activities significantly increased, resulting in a net cash decrease of $22.9 million due to debt refinancing Cash Flow Summary (in thousands) | Cash Flow Activity | Thirty-Nine Weeks Ended Oct 28, 2023 | Thirty-Nine Weeks Ended Oct 29, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $56,682 | $66,720 | | Net cash used in investing activities | $(10,760) | $(5,173) | | Net cash used in financing activities | $(68,860) | $(7,424) | | **Net change in cash and cash equivalents** | **$(22,938)** | **$54,123** | [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue disaggregation, debt structure, and equity compensation, highlighting the April 2023 debt refinancing that resulted in a $12.7 million loss and the granting of new Performance Stock Units - Net sales are primarily generated from Retail stores (**55.0% YTD**) and Direct channels (**45.0% YTD**), with Direct channel sales decreasing to **$204.8 million YTD in 2023** from **$214.5 million in 2022**[25](index=25&type=chunk)[106](index=106&type=chunk) - On April 5, 2023, the company entered into a new **$175.0 million Term Loan Credit Agreement** maturing in 2028, with proceeds used to repay existing Priming and Subordinated Term Loans[34](index=34&type=chunk)[38](index=38&type=chunk) - The debt refinancing resulted in a recorded loss of **$12.7 million** during the thirty-nine weeks ended October 28, 2023[39](index=39&type=chunk) - During the thirty-nine weeks ended October 28, 2023, the company granted Performance Stock Units (PSUs) with performance goals based on Adjusted EBITDA and total shareholder return (TSR)[59](index=59&type=chunk)[62](index=62&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 reports Q3 2023 net sales were flat with improved gross margin and 30.2% net income growth, while year-to-date net income declined 23.6% due to a $12.7 million debt refinancing loss, with liquidity expected to be sufficient after the April 2023 debt refinancing [Results of Operations](index=19&type=section&id=Results%20of%20Operations) For Q3 2023, net sales were flat at $150.1 million, with gross margin expanding to 71.8% and operating income increasing 17.4%; for the thirty-nine weeks, net sales decreased 2.7% to $455.2 million, and income before taxes fell 20.8% due to a $12.7 million debt refinancing loss Q3 2023 vs Q3 2022 Performance (in thousands) | Metric | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $150,125 | $150,204 | (0.1)% | | Gross profit | $107,842 | $105,023 | 2.7% | | Gross Margin | 71.8% | 69.9% | +190 bps | | Operating income | $22,127 | $18,850 | 17.4% | | Net income | $11,616 | $8,919 | 30.2% | YTD 2023 vs YTD 2022 Performance (in thousands) | Metric | YTD 2023 | YTD 2022 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $455,214 | $467,616 | (2.7)% | | Gross profit | $326,791 | $326,960 | (0.1)% | | Gross Margin | 71.8% | 69.9% | +190 bps | | Operating income | $75,564 | $70,928 | 6.5% | | Net income | $31,434 | $41,139 | (23.6)% | [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) As of October 28, 2023, the company held $64.1 million in cash and $34.2 million ABL availability, with a significant debt refinancing in April 2023 extending the term loan and ABL facility maturities to 2028, ensuring sufficient liquidity - As of October 28, 2023, the company had **$64.1 million** in cash and **$34.2 million** of availability under its ABL Facility[113](index=113&type=chunk) - In April 2023, the company entered into a new **$175.0 million Term Loan Credit Agreement** maturing in May 2028, using the proceeds to fully repay previous credit agreements[114](index=114&type=chunk) - The maturity date of the ABL Credit Agreement was extended from May 2024 to May 2028[117](index=117&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risk exposure during Q3 Fiscal Year 2023, referring to the 2022 Annual Report on Form 10-K for detailed discussion - There have been no material changes in the company's exposure to market risk during the third quarter of Fiscal Year 2023[135](index=135&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of October 28, 2023, with no material changes to internal control over financial reporting during Q3 - Management concluded that as of October 28, 2023, the company's disclosure controls and procedures are effective[136](index=136&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the third quarter of Fiscal Year 2023[137](index=137&type=chunk) [PART II. OTHER INFORMATION](index=24&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various ordinary course legal proceedings, none of which are expected to have a material adverse effect on its business or financial condition - The company is subject to various legal proceedings arising in the ordinary course of business[72](index=72&type=chunk) - Management does not believe that the resolution of any current legal proceedings would have a material adverse effect on the company[72](index=72&type=chunk)[139](index=139&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K have occurred - As of the date of this report, there have been no material changes to the risk factors previously disclosed in the 2022 Annual Report[140](index=140&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[141](index=141&type=chunk) [Exhibits](index=24&type=section&id=Item%206.%20Exhibits) The report includes various exhibits, notably CEO and CFO certifications required by the Sarbanes-Oxley Act and an amendment to an executive employment agreement - Exhibits filed with the report include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[147](index=147&type=chunk)

J.Jill, Inc. (NYSE:JILL) Q3 2023 Earnings Conference Call December 5, 2023 8:00 AM ET Company Participants Claire Spofford - President and Chief Executive Officer Mark Webb - Executive Vice President, Chief Financial Officer and Chief Operating Officer Conference Call Participants Jeff Lick - B. Riley Financial Ryan Meyers - Lake Street Capital Markets Dana Telsey - Telsey Group Operator Good morning. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome eve ...

Financial Data and Key Metrics Changes - Total company sales for Q2 2023 were $156 million, down 2.9% compared to Q2 2022 [11] - Q2 gross profit was $111 million, a decrease of $1.1 million from Q2 2022, with a gross margin of 71.6%, up 140 basis points year-over-year [12] - Adjusted EBITDA for Q2 was $34.5 million, compared to $35.6 million in Q2 2022 [29] - Cash generated from operations in Q2 was $28 million, ending with $49 million in cash and no borrowings [13] Business Line Data and Key Metrics Changes - Store sales for Q2 were down about 1% versus Q2 2022, with about 1% fewer stores [11] - Direct sales as a percentage of total sales were 45% in the quarter, down 5% compared to Q2 2022 [47] - Unit sales were more markdown-oriented compared to last year, with higher online returns negatively impacting net sales [28] Market Data and Key Metrics Changes - The company saw customer growth in both channels, particularly in new-to-brand customers in the direct channel [6] - The inventory at the end of Q2 was down 16% compared to the end of Q2 2022, largely due to improved conditions [49] Company Strategy and Development Direction - The company is focusing on strengthening omnichannel capabilities through strategic investments in infrastructure and systems [7] - A new POS system rollout is expected to be completed by the end of Q3, with the next phase involving an upgrade of the order management system [7][50] - The company plans to introduce a Wearever Works Capsule to highlight versatile pieces for customers [23] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about trends in consumer sentiment and responsiveness, which have improved since late Q2 [26] - The company expects sales to be down in the low-single-digits for Q3 2023 compared to Q3 2022, with adjusted EBITDA projected between $23 million and $25 million [31] - Management emphasized the importance of maintaining a disciplined approach to inventory management while investing in profitable growth [43] Other Important Information - Capital expenditures in Q2 were about $4 million, with full-year capital expected to be around $18 million [30][32] - The company is updating its guidance to reflect better-than-expected Q2 performance, expecting adjusted EBITDA to be down in the low-single-digits as a percentage compared to last year [51] Q&A Session Summary Question: Did you see improvement in both digital and stores? - Management confirmed a nice improvement over the quarter, particularly in full-price sales, with July being the strongest month [53] Question: Any updates on cash flow and outlook for the year? - Management highlighted strong cash flow generation and mentioned that they are investing in technology while managing cash prudently [56] Question: How do you view the balance in your business model? - Management noted the balance between direct and store sales, with direct sales now being a more full-price channel than before [60] Question: What are the strengths of your customer profile? - Management emphasized customer loyalty and the strength of the product assortments as key factors driving the brand's performance [62]

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents J.Jill, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, shareholders' equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) **Condensed Consolidated Balance Sheet Highlights (in thousands):** | Metric | July 29, 2023 | January 28, 2023 | Change (YoY) | | :-------------------------------- | :------------ | :--------------- | :----------- | | Cash and cash equivalents | $48,903 | $87,053 | $(38,150) | | Inventories, net | $45,689 | $50,585 | $(4,896) | | Total current assets | $116,172 | $160,820 | $(44,648) | | Total assets | $416,760 | $466,417 | $(49,657) | | Total current liabilities | $118,129 | $126,987 | $(8,858) | | Long-term debt, net of discount and current portion | $150,296 | $195,517 | $(45,221) | | Total liabilities | $397,647 | $466,636 | $(68,989) | | Total shareholders' equity (deficit) | $19,113 | $(219) | $19,332 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Unaudited)) **Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data):** | Metric | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | Change (YoY) | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Net sales | $155,669 | $160,343 | (2.9%) | $305,089 | $317,412 | (3.9%) | | Gross profit | $111,409 | $112,474 | (0.9%) | $218,949 | $221,937 | (1.3%) | | Operating income | $28,044 | $28,193 | (0.5%) | $53,438 | $52,078 | 2.6% | | Loss on debt refinancing | — | — | N/A | $12,702 | — | N/A | | Interest expense, net | $6,157 | $3,547 | 73.6% | $11,214 | $7,205 | 55.6% | | Net income | $15,222 | $17,805 | (14.5%) | $19,818 | $32,220 | (38.5%) | | Diluted EPS | $1.06 | $1.25 | (15.2%) | $1.38 | $2.27 | (39.2%) | [Condensed Consolidated Statements of Shareholders' Equity (Deficit) (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Deficit)%20(Unaudited)) **Condensed Consolidated Statements of Shareholders' Equity (Deficit) Highlights (in thousands):** | Metric | January 28, 2023 | April 29, 2023 | July 29, 2023 | | :-------------------------------- | :--------------- | :------------- | :------------ | | Total Shareholders' Equity (Deficit) | $(219) | $3,325 | $19,113 | | Net income (for period) | N/A | $4,596 | $15,222 | | Equity-based compensation (for period) | N/A | $878 | $937 | **Key Changes:** * Shareholders' equity significantly improved from a deficit of **$(219)k** at January 28, 2023, to a positive **$19,113k** at July 29, 2023 * Net income contributed **$15,222k** to equity during the quarter ended July 29, 2023 [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) **Condensed Consolidated Statements of Cash Flows Highlights (in thousands):** | Metric | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Net cash provided by operating activities | $35,615 | $35,457 | $158 | | Net cash used in investing activities | $(7,105) | $(2,161) | $(4,944) | | Net cash used in financing activities | $(66,660) | $(7,397) | $(59,263) | | Net change in cash and cash equivalents | $(38,150) | $25,899 | $(64,049) | | Cash and cash equivalents, End of Period | $48,903 | $61,856 | $(12,953) | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1. Description of Business](index=7&type=section&id=Note%201.%20Description%20of%20Business) - J.Jill, Inc. is a national lifestyle brand offering apparel, footwear, and accessories for women, operating through **over 200 stores** nationwide and a robust e-commerce platform[20](index=20&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=7&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The interim condensed consolidated financial statements are unaudited and prepared in accordance with GAAP, consistently applying policies from the 2022 Annual Report[21](index=21&type=chunk) - The fiscal year ending February 3, 2024, is comprised of **53 weeks**[22](index=22&type=chunk) - Cost of goods sold includes direct merchandise costs, inventory shrinkage, and adjustments, but excludes distribution center and indirect costs[24](index=24&type=chunk) - Selling, general and administrative expenses cover payroll, occupancy, information systems, marketing, warehousing, distribution, customer service, and professional services[25](index=25&type=chunk) [Note 3. Revenues](index=8&type=section&id=Note%203.%20Revenues) **Disaggregated Net Sales (in thousands):** | Channel | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Retail | $86,110 | $87,081 | $168,314 | $171,293 | | Direct | $69,559 | $73,262 | $136,775 | $146,119 | | Net sales | $155,669 | $160,343 | $305,089 | $317,412 | **Key Insights:** * Net sales **decreased by 2.9%** for the thirteen weeks and **3.9%** for the twenty-six weeks ended July 29, 2023, compared to the prior year[26](index=26&type=chunk) * Contract liabilities (signing bonus and unredeemed gift cards) decreased from **$7,213k** at January 28, 2023, to **$5,520k** at July 29, 2023[27](index=27&type=chunk) - Revenue recognized from gift card redemptions and breakage was approximately **$2.6 million** for the thirteen weeks and **$5.5 million** for the twenty-six weeks ended July 29, 2023[28](index=28&type=chunk) [Note 4. Goodwill and Other Intangible Assets](index=9&type=section&id=Note%204.%20Goodwill%20and%20Other%20Intangible%20Assets) **Goodwill and Other Intangible Assets (in thousands):** | Asset Type | July 29, 2023 Carrying Amount | January 28, 2023 Carrying Amount | | :-------------------- | :------------------------------ | :------------------------------- | | Goodwill | $59,697 | $59,697 | | Trade name | $34,000 | $34,000 | | Customer relationships | $35,717 | $39,188 | | Total intangible assets | $69,717 | $73,188 | **Key Insights:** * Goodwill balance remained stable at **$59.7 million**, with accumulated impairment losses of **$137.3 million**[31](index=31&type=chunk) * Total amortization expense for amortizable intangible assets was **$3.5 million** for the twenty-six weeks ended July 29, 2023, a decrease from **$3.8 million** in the prior year[33](index=33&type=chunk) * No impairment events were identified during the twenty-six weeks ended July 29, 2023 [Note 5. Debt](index=10&type=section&id=Note%205.%20Debt) - On April 5, 2023, the Company entered into a new Term Loan Credit Agreement for **$175.0 million**, maturing May 8, 2028, which was used to repay the outstanding **$225.4 million** under the Priming Term Loan and Subordinated Term Loan Credit Agreements[35](index=35&type=chunk)[39](index=39&type=chunk) - A loss on debt refinancing of **$12.7 million** was recorded for the twenty-six weeks ended July 29, 2023, primarily related to the repayment of the Subordinated Credit Agreement[40](index=40&type=chunk) - The ABL Credit Agreement maturity date was extended from May 8, 2024, to May 10, 2028, and the Company was in compliance with all debt covenants as of July 29, 2023[38](index=38&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) **Outstanding Long-Term Debt (in thousands):** | Debt Type | July 29, 2023 Balance Sheet | January 28, 2023 Balance Sheet | | :------------------------------------ | :-------------------------- | :--------------------------- | | Term Loan due 2028 (net) | $150,296 | — | | Priming Term Loan due 2024 (net) | — | $198,941 | | Subordinated Term Loan due 2024 (net) | — | $9,719 | | Net long-term debt | $150,296 | $205,236 | [Note 6. Fair Value Measurements](index=12&type=section&id=Note%206.%20Fair%20Value%20Measurements) - The company's debt instruments are classified as Level 2 fair value measurements, with a carrying value of **$159,046k** and a fair value of **$166,968k** as of July 29, 2023, based on observable market prices for similar instruments[49](index=49&type=chunk) - Other financial instruments like cash, accounts receivable, and accounts payable approximate their fair value due to their short-term maturities[50](index=50&type=chunk) [Note 7. Income Taxes](index=13&type=section&id=Note%207.%20Income%20Taxes) **Income Tax Provision and Effective Tax Rates:** | Metric | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income tax provision | $6,665 | $5,912 | $8,630 | $10,922 | | Effective tax rate | 30.5% | 24.9% | 30.3% | 25.3% | **Key Insights:** * The effective tax rates for both periods in 2023 were higher than the federal statutory rate of **21%** primarily due to state and local income taxes, executive compensation limitations, and non-deductible expenses[53](index=53&type=chunk)[54](index=54&type=chunk) * A **$1.4 million** valuation allowance against state deferred tax assets was maintained as of July 29, 2023[55](index=55&type=chunk) [Note 8. Net Income Per Share](index=13&type=section&id=Note%208.%20Net%20Income%20Per%20Share) **Net Income Per Common Share (EPS):** | Metric | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS | $1.08 | $1.28 | $1.40 | $2.32 | | Diluted EPS | $1.06 | $1.25 | $1.38 | $2.27 | **Key Insights:** * Both basic and diluted EPS decreased for the thirteen and twenty-six weeks ended July 29, 2023, compared to the prior year[56](index=56&type=chunk) * Warrants issued to Subordinated Credit Agreement holders are included in EPS calculations due to their near-certain exercise[57](index=57&type=chunk) [Note 9. Equity-Based Compensation](index=14&type=section&id=Note%209.%20Equity-Based%20Compensation) - The J.Jill, Inc. Omnibus Equity Incentive Plan (A&R Plan) has **2,043,453 shares** reserved, with **1,117,373 shares** remaining for future issuance as of July 29, 2023[59](index=59&type=chunk) - Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) were granted[60](index=60&type=chunk) - RSUs vest in **1-3 annual installments**, while PSUs are based on Adjusted EBITDA and annualized absolute total shareholder return (TSR) goals, with potential payouts ranging from **0% to 200%** of target shares[62](index=62&type=chunk)[63](index=63&type=chunk) **Equity-Based Compensation Expense (in thousands):** | Period | 2023 | 2022 | | :-------------------- | :----- | :----- | | 13 Weeks Ended July | $937 | $976 | | 26 Weeks Ended July | $1,815 | $1,718 | **Key Insights:** * As of July 29, 2023, there was **$5.4 million** of unrecognized compensation expense for RSUs (weighted-average service period of **1.9 years**) and **$1.7 million** for PSUs (weighted-average service period of **2.5 years**)[66](index=66&type=chunk)[67](index=67&type=chunk) [Note 10. Related Party Transactions](index=15&type=section&id=Note%2010.%20Related%20Party%20Transactions) - TowerBrook Capital Partners, LP controls a majority of J.Jill's voting stock, making it a controlled company[68](index=68&type=chunk) - The Subordinated Credit Agreement with related parties was repaid in full on April 5, 2023[69](index=69&type=chunk) **Interest Expense, Net - Related Party (in thousands):** | Period | 2023 | 2022 | | :-------------------- | :----- | :----- | | 13 Weeks Ended July | $0 | $929 | | 26 Weeks Ended July | $1,074 | $1,731 | [Note 11. Commitments and Contingencies](index=15&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) - The Company is subject to various legal proceedings in the ordinary course of business but does not believe their resolution would have a material adverse effect on its financial condition or operations[72](index=72&type=chunk) - Reserves are established for probable and estimable losses [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes J.Jill's financial condition and operating results, covering business overview, performance metrics, Adjusted EBITDA reconciliation, and liquidity analysis [Overview](index=16&type=section&id=Overview) - J.Jill is a national lifestyle brand offering apparel, footwear, and accessories designed for women, operating through over 200 stores nationwide and a robust e-commerce platform, headquartered outside Boston[76](index=76&type=chunk) [Factors Affecting Our Operating Results](index=16&type=section&id=Factors%20Affecting%20Our%20Operating%20Results) - Operating results are influenced by overall economic trends (consumer confidence, inflation), consumer preferences and fashion trends, intense retail competition, the implementation of strategic initiatives (e-commerce, information systems upgrades), pricing strategies, merchandise mix, supply chain issues, and potential changes in tax laws and regulations[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) [How We Assess the Performance of Our Business](index=17&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) - Key performance metrics include net sales (impacted by customer base, product assortment, marketing, and omnichannel migration), total company comparable sales (performance of existing stores and Direct channel), number of stores, gross profit/margin, costs of goods sold (COGS), selling, general and administrative (SG&A) expenses, and non-GAAP Adjusted EBITDA and Adjusted EBITDA Margin[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk) - COGS variability is driven by raw materials, transportation, freight costs, energy prices, currency fluctuations, and commodity prices[89](index=89&type=chunk) - SG&A expenses generally do not vary proportionately with net sales, leading to higher percentages in lower-volume periods[91](index=91&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA and Calculation of Adjusted EBITDA Margin](index=18&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA%20and%20Calculation%20of%20Adjusted%20EBITDA%20Margin) **Adjusted EBITDA and Margin (in thousands):** | Metric | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | Change (YoY) | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Net income | $15,222 | $17,805 | (14.5%) | $19,818 | $32,220 | (38.5%) | | Adjusted EBITDA | $34,545 | $35,572 | (2.9%) | $66,408 | $66,869 | (0.7%) | | Adjusted EBITDA margin | 22.2% | 22.2% | 0.0 ppt | 21.8% | 21.1% | 0.7 ppt | **Key Insights:** * Adjusted EBITDA for the thirteen weeks decreased slightly by **2.9%**, while the margin remained stable at **22.2%**[95](index=95&type=chunk) * For the twenty-six weeks, Adjusted EBITDA decreased by **0.7%**, but the margin improved by **0.7 percentage points** to **21.8%**[95](index=95&type=chunk) * The 2023 twenty-six-week period includes a **$12.7 million** loss on debt refinancing as a significant adjustment[95](index=95&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) [Thirteen weeks ended July 29, 2023 Compared to Thirteen weeks ended July 30, 2022](index=19&type=section&id=Thirteen%20weeks%20ended%20July%2029,%202023%20Compared%20to%20Thirteen%20weeks%20ended%20July%2030,%202022) **Financial Performance (13 Weeks Ended July):** | Metric | July 29, 2023 | July 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | :--------- | | Net sales | $155,669 | $160,343 | $(4,674) | (2.9%) | | Costs of goods sold | $44,260 | $47,869 | $(3,609) | (7.5%) | | Gross profit | $111,409 | $112,474 | $(1,065) | (0.9%) | | Gross margin | 71.6% | 70.1% | 1.5 ppt | N/A | | SG&A expenses | $83,365 | $84,281 | $(916) | (1.1%) | | Operating income | $28,044 | $28,193 | $(149) | (0.5%) | | Interest expense, net | $6,157 | $3,547 | $2,610 | 73.6% | | Net income | $15,222 | $17,805 | $(2,583) | (14.5%) | **Key Insights:** * The decrease in net sales was primarily driven by a **1.3% decrease** in total company comparable sales[96](index=96&type=chunk) * Gross margin improved due to lower freight costs[97](index=97&type=chunk) * SG&A expenses decreased mainly due to lower depreciation and amortization[99](index=99&type=chunk)[100](index=100&type=chunk) * Net income declined due to increased interest expense and a higher effective tax rate (**30.5% vs 24.9%**)[102](index=102&type=chunk)[103](index=103&type=chunk) [Twenty-six weeks ended July 29, 2023 Compared to Twenty-six weeks ended July 30, 2022](index=20&type=section&id=Twenty-six%20weeks%20ended%20July%2029,%202023%20Compared%20to%20Twenty-six%20weeks%20ended%20July%2030,%202022) **Financial Performance (26 Weeks Ended July):** | Metric | July 29, 2023 | July 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | :--------- | | Net sales | $305,089 | $317,412 | $(12,323) | (3.9%) | | Costs of goods sold | $86,140 | $95,475 | $(9,335) | (9.8%) | | Gross profit | $218,949 | $221,937 | $(2,988) | (1.3%) | | Gross margin | 71.8% | 69.9% | 1.9 ppt | N/A | | SG&A expenses | $165,511 | $169,859 | $(4,348) | (2.6%) | | Operating income | $53,438 | $52,078 | $1,360 | 2.6% | | Loss on debt refinancing | $12,702 | — | $12,702 | N/A | | Interest expense, net | $11,214 | $7,205 | $4,009 | 55.6% | | Net income | $19,818 | $32,220 | $(12,402) | (38.5%) | **Key Insights:** * Net sales **decreased by 3.9%**, driven by a **2.0% decrease** in total company comparable sales[104](index=104&type=chunk)[105](index=105&type=chunk) * Gross margin improved due to lower freight costs[107](index=107&type=chunk) * Operating income increased by **2.6%**, but net income significantly decreased by **38.5%** primarily due to the **$12.7 million** loss on debt refinancing and higher interest expense[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) * SG&A expenses decreased due to lower compensation and depreciation/amortization[108](index=108&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) [General](index=21&type=section&id=General) - Primary liquidity sources are cash from operating activities and availability under the ABL facility[113](index=113&type=chunk) - As of July 29, 2023, the Company had **$48.9 million** in cash and **$34.2 million** of total availability under its ABL Facility[113](index=113&type=chunk) - On April 5, 2023, J.Jill entered into a new **$175.0 million** Term Loan Credit Agreement, maturing May 8, 2028, to fully repay previous Priming and Subordinated Credit Agreements[114](index=114&type=chunk)[117](index=117&type=chunk) - The ABL Credit Agreement maturity was also extended to May 10, 2028[117](index=117&type=chunk) - The Company was in compliance with all covenants under the Term Loan Credit Agreement as of July 29, 2023[116](index=116&type=chunk) [Cash Flow Analysis](index=22&type=section&id=Cash%20Flow%20Analysis) **Cash Flow Summary (26 Weeks Ended July, in thousands):** | Activity | July 29, 2023 | July 30, 2022 | | :-------------------------------- | :------------ | :------------ | | Net cash provided by operating activities | $35,615 | $35,457 | | Net cash used in investing activities | $(7,105) | $(2,161) | | Net cash used in financing activities | $(66,660) | $(7,397) | - Net cash provided by operating activities increased slightly by **$0.2 million**, driven by improved operating performance (excluding debt refinancing loss) and a **$1.0 million decrease** in cash used for working capital[120](index=120&type=chunk) - Net cash used in investing activities increased to **$7.1 million** due to higher purchases of property and equipment and capitalized software[123](index=123&type=chunk) - Net cash used in financing activities significantly increased to **$66.7 million**, primarily due to the repayment of the previously existing Priming and Subordinated Credit Agreements, partially offset by proceeds from the new Term Loan[124](index=124&type=chunk) [Dividends](index=22&type=section&id=Dividends) - Future cash dividends are at the discretion of the board of directors, dependent on earnings, capital requirements, legal restrictions, financial condition, and debt agreement restrictions[125](index=125&type=chunk) - As a holding company, J.Jill's ability to pay dividends relies on cash received from its operating subsidiaries[125](index=125&type=chunk) [Credit Facilities](index=22&type=section&id=Credit%20Facilities) - As of July 29, 2023, there were no short-term borrowings outstanding under the ABL Facility[126](index=126&type=chunk) - The Company had **$34.2 million** in additional borrowing capacity and **$5.8 million** in outstanding letters of credit, which reduced availability[126](index=126&type=chunk) [Contractual Obligations](index=23&type=section&id=Contractual%20Obligations) - The Company's contractual obligations primarily consist of debt obligations, interest payments, operating leases, and purchase orders for merchandise inventory, which impact its short-term and long-term liquidity and capital resource needs[127](index=127&type=chunk) [Contingencies](index=23&type=section&id=Contingencies) - J.Jill is subject to various legal proceedings in the ordinary course of business, but management does not believe their resolution would have a material adverse effect[128](index=128&type=chunk) - Reserves are established for probable and estimable losses [Off-Balance Sheet Arrangements](index=23&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company is not a party to any off-balance sheet arrangements[129](index=129&type=chunk) [Critical Accounting Policies and Significant Estimates](index=23&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Estimates) - Significant accounting estimates involve revenue recognition (gift card breakage, merchandise returns), inventory valuation, and impairment assessments for goodwill, other indefinite-lived intangible assets, and long-lived assets[130](index=130&type=chunk) - No significant changes to these policies or estimates have occurred since the 2022 Annual Report[131](index=131&type=chunk) [Special Note Regarding Forward-Looking Statements](index=23&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) - This Quarterly Report contains forward-looking statements that involve known and unknown risks, uncertainties, and other important factors that may cause actual results to differ materially[132](index=132&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[133](index=133&type=chunk)[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states no material changes in market risk exposure during Q2 FY2023, referring to the 2022 Annual Report for details - No material changes in the Company's exposure to market risk occurred during the second quarter of Fiscal Year 2023[135](index=135&type=chunk) - Further details are available in the 2022 Annual Report[135](index=135&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of July 29, 2023, with no material changes in internal control over financial reporting during Q2 FY2023 - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of July 29, 2023[136](index=136&type=chunk) - There have been no material changes in the Company's internal control over financial reporting during the second quarter of Fiscal Year 2023[137](index=137&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 for legal proceedings, expecting no material adverse effects from current cases - Information regarding legal proceedings is provided in Note 11 to the condensed consolidated financial statements[139](index=139&type=chunk) - Management does not believe current legal proceedings will have a material adverse effect[139](index=139&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) This section reports no material changes to previously disclosed risk factors, acknowledging potential for new or currently immaterial risks - No material changes to the risk factors previously disclosed in the 2022 Annual Report have occurred[140](index=140&type=chunk) - However, additional risk factors not presently known or deemed immaterial may impair the business[140](index=140&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[141](index=141&type=chunk) [Item 3. Defaults Upon Senior Securities](index=25&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[142](index=142&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[143](index=143&type=chunk) [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) The company reported no other information to disclose under this item - None[144](index=144&type=chunk) [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished as part of this Quarterly Report, including corporate governance documents, certifications by executive officers, and Inline XBRL data files - Exhibits include the Certificate of Incorporation, Bylaws, and certifications from the Principal Executive Officer and Principal Financial Officer as required by the Securities Exchange Act of 1934 and Sarbanes-Oxley Act of 2002[147](index=147&type=chunk) - The report also includes Inline XBRL documents for the instance, taxonomy extension schema, calculation, definition, label, and presentation linkbase documents, along with the Cover Page Interactive Data File[150](index=150&type=chunk) [SIGNATURES](index=27&type=section&id=SIGNATURES) - The report was duly signed on August 31, 2023, by Claire Spofford, Chief Executive Officer, President and Director, and Mark Webb, Executive Vice President, Chief Financial and Operating Officer, on behalf of J.Jill, Inc[152](index=152&type=chunk)[154](index=154&type=chunk)

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 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 | 45-1459825 | | --- | --- | | (State or oth ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) J.Jill is a national omnichannel lifestyle brand offering apparel, footwear, and accessories for affluent women aged 45 and older - J.Jill is a national lifestyle brand providing apparel, footwear, and accessories, targeting women aged 45 and older with a median annual household income of approximately **$150,000**[20](index=20&type=chunk)[22](index=22&type=chunk) Fiscal Year 2022 Channel Sales Mix | Channel | Percentage of Net Sales | | :--- | :--- | | Retail | 53% | | Direct (Ecommerce/Catalog) | 47% | Store Fleet Optimization (Fiscal Years 2019-2022) | Fiscal Year | Stores Opened | Stores Closed | Total Stores at Year-End | | :--- | :--- | :--- | :--- | | 2019 | 11 | (6) | 287 | | 2020 | — | (20) | 267 | | 2021 | — | (14) | 253 | | 2022 | 1 | (11) | 243 | - The company's growth strategy focuses on growing the value of its customer base, increasing direct sales, strengthening omnichannel capabilities, and enhancing its product assortment, including inclusive sizing[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - In Fiscal Year 2022, approximately **80%** of products were sourced through agents and **20%** directly from suppliers, with merchandise sourced globally from **11 countries** No single supplier accounts for more than **20%** of merchandise purchased by volume[54](index=54&type=chunk)[56](index=56&type=chunk) - As of January 28, 2023, the company employed **1,115 full-time** and **1,869 part-time** associates[63](index=63&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including macroeconomic sensitivity, intense competition, operational complexities, substantial debt, and information security threats - **Business & Industry Risks:** The business is sensitive to economic downturns, consumer discretionary spending, and the COVID-19 pandemic It faces intense competition and must continually respond to changing fashion trends and maintain its brand image[75](index=75&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk)[83](index=83&type=chunk) - **Indebtedness Risks:** The company has a substantial amount of debt under its Credit Facilities, which contain restrictive covenants that limit operational and financial flexibility The Priming Facility and ABL Facility mature in **May 2024**, and the Subordinated Term Loan Facility matures in **November 2024**, creating refinancing risk[115](index=115&type=chunk)[117](index=117&type=chunk)[122](index=122&type=chunk) - **Operational & Sourcing Risks:** The company relies on independent third-party suppliers, primarily outside the U.S., exposing it to risks of production and shipment disruptions It also depends on a single distribution center in Tilton, New Hampshire, making it vulnerable to operational interruptions[102](index=102&type=chunk)[104](index=104&type=chunk)[113](index=113&type=chunk) - **Corporate & Governance Risks:** As a **'controlled company'** by TowerBrook Capital Partners LP, J.Jill is exempt from certain NYSE corporate governance requirements, such as having a majority of independent directors TowerBrook's interests may conflict with those of other stockholders[130](index=130&type=chunk)[131](index=131&type=chunk) - **Information Security Risks:** The business depends on information systems for all aspects of its operations and is exposed to risks from security breaches, data loss, and evolving data privacy regulations[154](index=154&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk) [Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[176](index=176&type=chunk) [Properties](index=31&type=section&id=Item%202.%20Properties) J.Jill leases all its properties, including its corporate headquarters, a 520,000 square foot distribution center, and 243 retail stores across 42 states - The company leases its principal executive offices in Quincy, MA, and its **520,000 square foot** distribution and customer contact center in Tilton, New Hampshire[177](index=177&type=chunk) - As of January 28, 2023, the company operated **243 retail stores** in **42 states**, all of which are leased The average store size is approximately **3,700 square feet**[178](index=178&type=chunk) Store Lease Expiration Schedule | Fiscal Years Lease Terms Expire | Number of Stores | | :--- | :--- | | 2023 – 2025 | 138 | | 2026 – 2028 | 86 | | 2029 – 2031 | 17 | | 2032 and later | 2 | [Legal Proceedings](index=32&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently party to any legal proceedings that it believes would have a material adverse effect on its business or financial condition - The company is not presently party to any material legal proceedings[181](index=181&type=chunk) [Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[182](index=182&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=33&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under 'JILL', underwent a 1-for-5 reverse stock split, and has paid one special cash dividend, with future dividends restricted by debt agreements - The company's common stock began trading on the NYSE under the symbol "JILL" on **March 9, 2017**[184](index=184&type=chunk) - A **1-for-5 reverse stock split** was effective on **November 9, 2020** All share and per-share amounts have been retroactively adjusted[186](index=186&type=chunk) - The company paid one special cash dividend of approximately **$50.2 million** on **April 1, 2019** Future dividends are restricted by the company's credit agreements[187](index=187&type=chunk)[188](index=188&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For Fiscal Year 2022, J.Jill reported increased net sales and gross margin, a significant turnaround to net income, and solid liquidity, with debt maturities approaching [Results of Operations](index=38&type=section&id=Results%20of%20Operations) For Fiscal Year 2022, net sales increased by **5.1%** to **$615.3 million**, gross profit rose **7.0%**, and the company achieved a net income of **$42.2 million** Consolidated Results of Operations (FY 2022 vs. FY 2021) | (in thousands) | FY 2022 | FY 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $615,268 | $585,206 | $30,062 | 5.1% | | Gross profit | $422,050 | $394,436 | $27,614 | 7.0% | | Operating income | $78,734 | $58,720 | $20,014 | 34.1% | | Net income (loss) | $42,175 | $(28,143) | $70,318 | 249.9% | - The **5.1%** increase in net sales was driven by a total company comparable sales increase of **6.5%**, benefiting from higher full-price sales[215](index=215&type=chunk) - Gross margin improved to **68.6%** from **67.4%**, largely due to favorable promotional rates and strong full-price sales in the Retail channel[217](index=217&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **1.8%** to **$341.9 million**, driven by higher costs in marketing, compensation, and shipping[218](index=218&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations and its ABL facility, with **$87.1 million** in cash and **$30.0 million** ABL availability, and plans to refinance its Priming Credit Agreement maturing in May 2024 - As of January 28, 2023, the company had **$87.1 million** in cash and cash equivalents and **$30.0 million** of total availability under its **$40.0 million** ABL Facility[223](index=223&type=chunk) Cash Flow Summary (in thousands) | | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $74,425 | $74,999 | | Net cash used in investing activities | $(15,067) | $(5,474) | | Net cash used in financing activities | $(8,262) | $(37,975) | Long-Term Debt as of January 28, 2023 (Carrying Value, in thousands) | Facility | Carrying Value | | :--- | :--- | | Priming Facility | $198,941 | | Subordinated Term Loan Facility | $9,719 | | **Net long-term debt** | **$205,236** | - The Priming Credit Agreement matures on **May 8, 2024**, and the company intends to refinance this debt[238](index=238&type=chunk) [Critical Accounting Policies and Significant Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Estimates) Critical accounting policies involve significant estimates for revenue recognition, inventory valuation, and impairment assessments for goodwill, trade name, and other long-lived assets - Key critical accounting policies involve significant estimates for revenue recognition (sales returns, gift card breakage), inventory valuation (obsolescence reserves), and asset impairment assessments[247](index=247&type=chunk) - Goodwill and the company's trade name are tested for impairment annually or more frequently if indicators exist The company uses qualitative and quantitative (discounted cash flow) approaches for these tests[255](index=255&type=chunk)[257](index=257&type=chunk)[261](index=261&type=chunk) - Long-lived assets, such as property, equipment, and operating lease assets, are assessed for impairment whenever events indicate their carrying value may not be recoverable[264](index=264&type=chunk)[265](index=265&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on variable-rate borrowings, with a **10%** rate change impacting net income by approximately **$1.6 million** - The company is subject to interest rate risk from its variable-rate borrowings under the Priming Facility and Subordinated Term Loan Facility[271](index=271&type=chunk) - Based on outstanding borrowings as of January 28, 2023, a **10%** change in the interest rate would have affected net income by **$1.6 million** during Fiscal Year 2022[271](index=271&type=chunk) [Financial Statements and Supplementary Data](index=45&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years ended January 28, 2023, and January 29, 2022, including balance sheets, income statements, equity, and cash flows Consolidated Balance Sheet Data (in thousands) | | Jan 28, 2023 | Jan 29, 2022 | | :--- | :--- | :--- | | Total Current Assets | $160,820 | $123,248 | | Total Assets | $466,417 | $451,849 | | Total Current Liabilities | $126,987 | $138,745 | | Total Liabilities | $466,636 | $496,503 | | Total Shareholders' Deficit | $(219) | $(44,654) | Net Income (Loss) Per Share | | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Basic | $3.03 | $(2.26) | $(15.22) | | Diluted | $2.95 | $(2.26) | $(15.22) | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=45&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[273](index=273&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of January 28, 2023, affirmed by an unqualified audit opinion - Management concluded that the company's disclosure controls and procedures were effective as of **January 28, 2023**[275](index=275&type=chunk) - Management assessed the company's internal control over financial reporting as effective as of **January 28, 2023**, based on the COSO framework[278](index=278&type=chunk) - The independent registered public accounting firm, Grant Thornton LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[279](index=279&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=47&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement - The information required by this item is incorporated by reference from the Registrant's definitive proxy statement[285](index=285&type=chunk) [Executive Compensation](index=47&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement - The information required by this item is incorporated by reference from the Registrant's definitive proxy statement[287](index=287&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=47&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners, management, and related stockholder matters is incorporated by reference from the company's definitive proxy statement - The information required by this item is incorporated by reference from the Registrant's definitive proxy statement[288](index=288&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=47&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive proxy statement - The information required by this item is incorporated by reference from the Registrant's definitive proxy statement[289](index=289&type=chunk) [Principal Accounting Fees and Services](index=47&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's definitive proxy statement - The information required by this item is incorporated by reference from the Registrant's definitive proxy statement[290](index=290&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=48&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index of all financial statements, schedules, and exhibits filed with or incorporated by reference into the Form 10-K - This section provides an index of all financial statements, schedules, and exhibits filed with or incorporated by reference into the Form 10-K[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) [Form 10-K Summary](index=51&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a Form 10-K summary - None[297](index=297&type=chunk)

J.Jill, Inc. (NYSE:JILL) Q4 2022 Earnings Conference Call March 14, 2023 8:00 AM ET Company Participants Claire Spofford - President and Chief Executive Officer Mark Webb - Executive Vice President, Chief Financial Officer, and Chief Operating Officer Conference Call Participants Dana Telsey - Telsey Group Janet Kloppenburg - JJK Research Daniel Lupo - Jefferies Operator Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the J.Jill Fo ...