J.Jill(US:JILL)2022-09-01 15:23Financial Data and Key Metrics Changes - The company reported total sales of $160 million for Q2 2022, an increase of 0.7% compared to Q2 2021 [21] - Adjusted EBITDA reached $36 million, or 22.2% of sales, compared to $33 million, or 20.5% of sales in Q2 2021 [25] - Gross profit was $112 million, up $3 million from Q2 2021, with a gross margin of 70.1%, an increase of 150 basis points year-over-year [23] - Cash generated from operations was $28 million for the quarter, with total cash at the end of Q2 amounting to $62 million and no borrowings against the ABL [26] Business Line Data and Key Metrics Changes - Store sales increased by 2% compared to Q2 2021, driven by higher average unit retails through strategic price increases and reduced promotions [21] - Direct sales as a percentage of total sales were 46%, down 0.7% compared to the previous year [22] Market Data and Key Metrics Changes - The company experienced a strong start to the quarter, particularly around Mother's Day, but noted a slowdown in purchasing in the latter part of the quarter as customers had shopped early [8][40] - The company remains optimistic about customer return for fall wardrobe purchases based on feedback from store associates [9][40] Company Strategy and Development Direction - The company is investing in brand awareness and customer base growth, particularly through the "Welcome Everybody" campaign focused on size inclusivity [10][11] - The strategy includes merging missy and women's collections to create a size-integrated shopping experience and enhancing marketing efforts to reach new customers [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative outlook regarding the consumer landscape but remains confident in leveraging operational disciplines for continued execution of objectives [18] - For Q3 2022, the company projects sales to be flat to down 3% compared to Q3 2021, with adjusted EBITDA expected between $21 million and $23 million [31] Other Important Information - Inventory levels increased by 12% compared to Q2 2021, driven by elevated levels of goods in transit [28] - The company plans to close a net of 10 to 14 stores in fiscal 2022, including the opening of up to two new stores late in the fourth quarter [35] Q&A Session Summary Question: What did you see regarding customer traffic and the Welcome Everybody campaign? - Management noted a slowdown in traffic in the latter half of the quarter, attributing it to early shopping and summer vacations, but expressed optimism for fall purchases [39][40] - Positive feedback was received regarding the Welcome Everybody campaign, with consumers appreciating the extended sizes and price parity [41] Question: What is the expectation for refinancing and its implications? - Management indicated that refinancing is not urgent but is being prepared for when market conditions are favorable [44][45] Question: Any updates on store openings and the environment? - Management confirmed ongoing opportunities for store growth but noted a slight revision down in expected store openings due to lead times and negotiations [46] Question: Can you elaborate on cash flow drivers and working capital? - Cash flow was primarily driven by full-price sales, with inventory investments aimed at ensuring on-time delivery [48]