J.Jill(US:JILL)2023-09-01 15:40Financial 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]