J.Jill, Inc. (NYSE:JILL) today announced financial results for the third quarter ended November 3, 2018.
Linda Heasley, CEO of J.Jill, Inc. stated, “Our third quarter results demonstrated progress on our near-term initiatives, including recent enhancements to our e-commerce site and a renewed emphasis on our product assortment. We had positive sales momentum, our inventory levels are lower than last year and in line with our expectations, and our e-commerce business benefited from the enhancements we delivered during the year. We are also making early progress on our longer-term strategic plan for the business.”
For the third quarter ended November 3, 2018:
For the thirty-nine weeks ended November 3, 2018:
The Company ended the third quarter fiscal 2018 with $59.9 million in cash. Inventory at the end of the third quarter fiscal 2018 decreased to $78.8 million compared to $85.4 million at the end of the third quarter of fiscal 2017. The Company opened two stores in the third quarter and ended the quarter with 275 stores.
* Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP Net Income to Adjusted EBITDA and Adjusted Net Income” for more information.
Outlook
The fourth quarter of fiscal 2017 included an extra week (the fifty-third week) as compared to the fourth quarter of fiscal 2018. The fifty-third week in fiscal 2017 generated approximately $9.2 million in sales and $0.02 in diluted earnings per share.
For the fourth quarter of fiscal 2018, the Company expects total comparable sales to decrease 2% to 4%, on a 13-week to 13-week basis consistent with the National Retail Federation’s restated 2017 calendar. Last year’s fourth quarter comparable sales growth was 8.9%, and included elevated levels of clearance sales. Total net sales are expected to decrease 10% to 12%, driven by the shorter fiscal period and the calendar shift created by the fifty-third week in fiscal 2017 which shifted sales from the fourth quarter to the third quarter in fiscal 2018. GAAP diluted earnings per share are expected to be in the range of $0.00 to $0.02, including a $0.03 negative impact related to the calendar shift. This is compared to $0.67 in the fourth quarter of fiscal 2017 which included the $0.02 benefit from the fifty-third week and a $0.55 benefit resulting from the U.S. Tax Cuts and Jobs Act.
Conference Call Information
A conference call to discuss third quarter fiscal 2018 results is scheduled for today, November 28, 2018, at 8:00 a.m. Eastern Time. Those interested in participating in the call are invited to dial (844) 579-6824 or (763) 488-9145 if calling internationally. Please dial in approximately 10 minutes prior to the start of the call and reference Conference ID 4648839 when prompted. A live audio webcast of the conference call will be available online at http://investors.jjill.com/Investors-Relations/News-Events.
A taped replay of the conference call will be available approximately two hours following the live call and can be accessed both online and by dialing (855) 859-2056 or (404) 537-3406. The pin number to access the telephone replay is 4648839. The telephone replay will be available until Wednesday, December 05, 2018.
About J.Jill, Inc.
J.Jill is a premier omnichannel retailer and nationally recognized women’s apparel brand committed to delighting customers with great wear-now product. The brand represents an easy, relaxed, inspired style that reflects the confidence and comfort of a woman with a rich, full life. J.Jill offers a guiding customer experience through more than 270 stores nationwide and a robust e-commerce platform. J.Jill is headquartered outside Boston. For more information, please visit www.jjill.com or http://investors.jjill.com. The information included on our websites is not incorporated by reference herein.
Non-GAAP Financial Measures
To supplement our unaudited consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), we use the following non-GAAP measures of financial performance:
While we believe that Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS are useful in evaluating our business, they are non-GAAP financial measures that have limitations as analytical tools. Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS should not be considered alternatives to, or substitutes for, net income (loss) or EPS, which are calculated in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS differently or not at all, which reduces the usefulness of such non-GAAP financial measures as tools for comparison. We recommend that you review the reconciliation and calculation of Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS to net income (loss) and EPS, the most directly comparable GAAP financial measures, under “Reconciliation of GAAP Net Income to Adjusted EBITDA and Adjusted Net Income” and not rely solely on Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, or any single financial measure to evaluate our business.
Forward-Looking Statements
This press release contains, and oral statements made from time to time by our representatives may contain, “forward-looking statements.” Forward-looking statements include statements under “Outlook” and other statements identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on our current expectations and assumptions regarding capital market conditions, our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, including risk regarding, our ability to manage inventory or anticipate consumer demand; changes in consumer confidence and spending; our competitive environment; our failure to open new profitable stores or successfully enter new markets and other factors set forth under “Risk Factors” in the Form 10K. Any forward-looking statement made in this press release speaks only as of the date on which it is made. J.Jill undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
(Tables Follow)
J.Jill, Inc. |
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Consolidated Statements of Operations and Comprehensive Income |
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(Unaudited) |
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(Amounts in thousands, except share and per share data) |
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For the Thirteen Weeks Ended | |||||||||||
November 3, 2018 |
October 28, 2017 |
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Net sales | $ | 174,106 | $ | 161,975 | |||||||
Cost of goods sold | 58,643 | 53,479 | |||||||||
Gross profit | 115,463 | 108,496 | |||||||||
Selling, general and administrative expenses | 101,589 | 95,240 | |||||||||
Operating income | 13,874 | 13,256 | |||||||||
Interest expense | 4,698 | 4,496 | |||||||||
Income before provision for income taxes | 9,176 | 8,760 | |||||||||
Provision for income taxes | 2,488 | 2,766 | |||||||||
Net income and total comprehensive income | $ | 6,688 | $ | 5,994 | |||||||
Net income per common share attributable to common shareholders | |||||||||||
Basic | $ | 0.16 | $ | 0.14 | |||||||
Diluted | $ | 0.15 | $ | 0.14 | |||||||
Weighted average number of common shares outstanding | |||||||||||
Basic | 42,953,173 | 41,731,765 | |||||||||
Diluted | 44,475,793 | 43,554,000 |
For the Thirty-Nine Weeks Ended | |||||||||||
November 3, 2018 |
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October 28, 2017 | |||||||||
Net sales | $ | 535,360 | $ | 509,473 | |||||||
Cost of goods sold | 182,901 | 162,721 | |||||||||
Gross profit | 352,459 | 346,752 | |||||||||
Selling, general and administrative expenses | 299,248 | 289,284 | |||||||||
Operating income | 53,211 | 57,468 | |||||||||
Interest expense | 14,368 | 14,525 | |||||||||
Income before provision for income taxes | 38,843 | 42,943 | |||||||||
Provision for income taxes | 10,412 | 16,926 | |||||||||
Net income and total comprehensive income | $ | 28,431 | $ | 26,017 | |||||||
Net income per common share attributable to common shareholders |
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Basic | $ | 0.67 | $ | 0.62 | |||||||
Diluted | $ | 0.64 | $ | 0.60 | |||||||
Weighted average number of common shares outstanding | |||||||||||
Basic | 42,674,957 | 41,933,244 | |||||||||
Diluted | 44,199,800 | 43,468,846 |
J.Jill, Inc. |
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Consolidated Balance Sheets |
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(Unaudited) |
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(Amounts in thousands, except common share data) |
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November 3, 2018 | February 3, 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 59,890 | $ | 25,978 | ||||
Accounts receivable | 7,509 | 4,733 | ||||||
Inventories, net | 78,844 | 80,591 | ||||||
Prepaid expenses and other current assets | 25,053 | 21,166 | ||||||
Total current assets | 171,296 | 132,468 | ||||||
Property and equipment, net | 113,932 | 118,420 | ||||||
Intangible assets, net | 139,373 | 148,961 | ||||||
Goodwill | 197,026 | 197,026 | ||||||
Other assets | 501 | 682 | ||||||
Total assets | $ | 622,128 | $ | 597,557 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 51,648 | $ | 53,962 | ||||
Accrued expenses and other current liabilities | 47,099 | 48,759 | ||||||
Current portion of long-term debt | 2,799 | 2,799 | ||||||
Total current liabilities | 101,546 | 105,520 | ||||||
Long-term debt, net of discount and current portion | 237,813 | 238,881 | ||||||
Deferred income taxes | 42,348 | 46,263 | ||||||
Other liabilities | 30,008 | 27,577 | ||||||
Total liabilities | 411,715 | 418,241 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ Equity | ||||||||
Common stock, par value $0.01 per share; 250,000,000 shares authorized; |
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43,747,757 and 43,752,790 shares issued and outstanding at |
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November 3, 2018 and February 3, 2018, respectively |
437 |
437 |
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Additional paid-in capital | 120,347 | 117,393 | ||||||
Accumulated earnings | 89,629 | 61,486 | ||||||
Total shareholders’ equity | 210,413 | 179,316 | ||||||
Total liabilities and shareholders’ equity | $ | 622,128 | $ | 597,557 |
J.Jill, Inc. |
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Reconciliation of GAAP Net Income to Adjusted EBITDA |
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(Unaudited) |
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(Amounts in thousands) |
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For the Thirteen Weeks Ended | |||||||||||
November 3, 2018 | October 28, 2017 | ||||||||||
Net income | $ | 6,688 | $ | 5,994 | |||||||
Interest expense, net | 4,698 | 4,496 | |||||||||
Provision for income taxes | 2,488 | 2,766 | |||||||||
Depreciation and amortization | 9,149 | 8,628 | |||||||||
Equity-based compensation expense (a) | 1,111 | 278 | |||||||||
Write-off of property and equipment (b) | 59 | 229 | |||||||||
Other non-recurring expenses (c) | — | 658 | |||||||||
Adjusted EBITDA | $ | 24,193 | $ | 23,049 | |||||||
For the Thirty-Nine Weeks Ended | |||||||||||
November 3, 2018 | October 28, 2017 | ||||||||||
Net income | $ | 28,431 | $ | 26,017 | |||||||
Interest expense, net | 14,368 | 14,525 | |||||||||
Provision for income taxes | 10,412 | 16,926 | |||||||||
Depreciation and amortization | 27,398 | 25,768 | |||||||||
Equity-based compensation expense (a) | 2,954 | 539 | |||||||||
Write-off of property and equipment (b) | 87 | 569 | |||||||||
Other non-recurring expenses (c) | 1,346 | 4,964 | |||||||||
Adjusted EBITDA | $ | 84,996 | $ | 89,308 |
(a): | Represents expenses associated with equity incentive instruments granted to our management and board of directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grants. | |
(b): | Represents net gain or loss on the disposal of fixed assets. | |
(c): | Represents items management believes are not indicative of ongoing operating performance. For the thirteen and thirty-nine week periods ended October 28, 2017, these expenses are primarily composed of legal and professional fees associated with the initial public offering completed March 14, 2017 and subsequent transition to a public company. For the thirty-nine weeks ended November 3, 2018, these expenses include costs related to a CEO transition. | |
J.Jill, Inc. |
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Reconciliation of GAAP Net Income to Adjusted Net Income |
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(Unaudited) |
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(Amounts in thousands, except share and per share data) |
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For the Thirteen Weeks Ended | |||||||||
November 3, 2018 | October 28, 2017 | ||||||||
Net income and total comprehensive income | $ | 6,688 | $ | 5,994 | |||||
Add: Provision for income taxes | 2,488 | 2,766 | |||||||
Income before provision for income taxes | 9,176 | 8,760 | |||||||
Add: Other non-recurring expenses(a) | — | 658 | |||||||
Adjusted Income before provision for income taxes | 9,176 | 9,418 | |||||||
Less: Adjusted Tax Provision(b) | 2,386 | 3,767 | |||||||
Adjusted net income | $ | 6,790 | $ | 5,651 | |||||
Adjusted net income per common share attributable to common shareholders | |||||||||
Basic | $ | 0.16 | $ | 0.14 | |||||
Diluted | $ | 0.15 | $ | 0.13 | |||||
Weighted average number of common shares outstanding | |||||||||
Basic | 42,953,173 | 41,731,765 | |||||||
Diluted | 44,475,793 | 43,554,000 |
For the Thirty-Nine Weeks Ended | |||||||||
November 3, 2018 | October 28, 2017 | ||||||||
Net income and total comprehensive income | $ | 28,431 | $ | 26,017 | |||||
Add: Provision for income taxes | 10,412 | 16,926 | |||||||
Income before provision for income taxes | 38,843 | 42,943 | |||||||
Add: Other non-recurring expenses(a) | 1,346 | 4,964 | |||||||
Add: Accelerated equity-based compensation expense | 244 | — | |||||||
Adjusted Income before provision for income taxes | 40,433 | 47,907 | |||||||
Less: Adjusted Tax Provision(b) | 10,513 | 19,163 | |||||||
Adjusted net income | $ | 29,920 | $ | 28,744 | |||||
Adjusted net income per common share attributable to common shareholders | |||||||||
Basic | $ | 0.70 | $ | 0.69 | |||||
Diluted | $ | 0.68 | $ | 0.66 | |||||
Weighted average number of common shares outstanding | |||||||||
Basic | 42,674,957 | 41,933,244 | |||||||
Diluted | 44,199,800 | 43,468,846 |
(a): | Represents items management believes are not indicative of ongoing operating performance. For the thirteen and thirty-nine week periods ended October 28, 2017, these expenses are primarily composed of legal and professional fees associated with the initial public offering completed March 14, 2017 and subsequent transition to a public company. For the thirty-nine weeks ended November 3, 2018, these expenses include costs related to a CEO transition. | |
(b): | The adjusted tax provision for adjusted net income is estimated by applying a rate of 26% for fiscal 2018 and 40% for fiscal 2017, to the adjusted income before provision for income taxes. | |
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Investor Contacts:
Caitlin Morahan / Joseph Teklits
ICR,
Inc.
[email protected]
203-682-8200
Media Contact:
Chris Gayton
J.Jill, Inc.
[email protected]
617-689-7916