J.Jill(JILL) - 2024 Q4 - Annual Results

Executive Summary & Business Highlights Overall Performance & Strategic Initiatives 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] - 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] - 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] 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 Q4 FY23 Key Financial Metrics 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] Full Year Fiscal 2023 Financial Review FY23 Key Financial Metrics 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 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] Business Outlook Fiscal Year 2024 Guidance 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] First Quarter Fiscal 2024 Guidance 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 About J.Jill, Inc. 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] - 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] Conference Call Details 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] - A replay of the conference call is accessible via phone and the company's investor website, valid until March 27, 2024[12] Investor Contacts 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] - Business and Financial Media contact: Ariel Kouvaras (Sloane & Company), email: akouvaras@sloanepr.com, phone: 973-897-6241[44] - Brand Media contact: Meredith Schwenk (J.Jill, Inc.), email: media@jjill.com, phone: 617-376-4399[44] Non-GAAP Financial Measures Definitions and Rationale for Non-GAAP Measures 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] - Adjusted Income from Operations: Represents operating income adjusted for retail store exit costs, impairment of long-lived assets, and other non-recurring items[14][15] - 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] - Free Cash Flow: Represents cash flow from operating activities less capital expenditures[17] - 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] Forward-Looking Statements Disclaimer 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] - 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] - 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] Consolidated Financial Statements & Reconciliations Consolidated Statements of Operations and Comprehensive Income (Q4 FY23) 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) 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 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] Selected Cash Flow Information 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 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 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 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] Reconciliation of GAAP Cash from Operations to Free Cash Flow 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]