Financial Data and Key Metrics Changes - Total company sales for Q2 2025 were approximately $154 million, down 0.8% compared to Q2 2024 [11] - Adjusted EBITDA for the quarter was $25.6 million, compared to $30.2 million in Q2 2024 [13] - Gross margin for Q2 was 68.4%, down about 210 basis points from Q2 2024, primarily due to a higher mix of markdown sales and increased promotional rates [12][13] - Adjusted net income per diluted share was $0.81, down from $1.05 in the previous year [13] Business Line Data and Key Metrics Changes - Store sales for Q2 increased by 0.4% compared to Q2 2024, driven by three net new stores [12] - Direct sales, representing about 46% of total sales, decreased by approximately 2% compared to Q2 2024 [12] Market Data and Key Metrics Changes - The company experienced improved sales trends month over month during Q2, particularly in June and July, attributed to clearance activities and positive customer response to promotions [11][23] - The company ended Q2 with clean inventories, having successfully cleared excess inventory units [15] Company Strategy and Development Direction - The company aims to expand its customer file by attracting new customers, re-engaging previous shoppers, and delighting existing loyal customers [4] - Focus areas include evolving product assortment, enhancing the customer journey, and improving operational efficiency through technology [5][8] - The company plans to open 50 stores by the end of 2029, with two new stores expected to open toward the end of Q3 2025 [8][18] Management's Comments on Operating Environment and Future Outlook - The management acknowledged a dynamic and uncertain environment, particularly regarding inflation and tariffs, and emphasized the importance of strong vendor relationships [10] - For Q3 2025, the company expects adjusted EBITDA to be in the range of $18 to $22 million, with sales anticipated to be flat to down low single digits [17] - The management expressed optimism about the consumer's gradual return and the potential for growth in the second half of the year [42] Other Important Information - The company generated $17 million of free cash flow in Q2, resulting in an ending cash balance of $46 million [11] - Capital expenditures for the quarter were approximately $3 million, focused on store improvements and the launch of ship-from-store capabilities [15] Q&A Session Summary Question: What drove the improvement in June and July? - The improvement was driven by clearance activities and a good customer response to promotions, particularly in July [23] Question: How should we think about the annualized tariff impact next year? - The annualized portion of the tariff impact is expected to be closer to $20 million, with ongoing efforts to mitigate this through vendor negotiations and strategic pricing [24] Question: Do you expect promotional levels to be in line or elevated versus last year in the second half? - The promotional levels will depend on consumer acceptance of price increases, with a range of outcomes anticipated [26][43] Question: Where do you see opportunities for change and innovation? - Opportunities include refining the marketing mix to attract more customers and enhancing the customer journey [34] Question: What are your thoughts on the state of your consumer? - The consumer is slowly returning, with optimism for Q3 as tariff concerns settle [42]
J.Jill(JILL) - 2026 Q2 - Earnings Call Transcript