J.Jill, Inc. (NYSE:JILL) today announced financial results for
the third quarter and the thirty-nine weeks ended October 28,
2017.
Paula Bennett, President and CEO of J.Jill, Inc. stated, “While
we are disappointed with our overall performance for the third
quarter, we are pleased to have ended the period with positive
trends in October driven largely by our retail store performance.
Thus far in the fourth quarter, we have returned to total
comparable sales growth, with our current product offering better
aligned to what our customer expects from J.Jill. With our return
to positive trends, and as we continue to analyze our performance,
we believe we are well-positioned to deliver against our goals for
the remainder of the year.”
For the third quarter ended October 28, 2017:
- Total net sales increased 1.6% to
$162.0 million from $159.4 million in the third quarter of fiscal
2016.
- Total company comparable sales, which
includes comparable store and direct to consumer sales, decreased
by 0.6%.
- Direct to consumer net sales
represented 39.5% of total net sales, compared to 40.4% in the
third quarter of fiscal 2016.
- Gross profit increased to $108.5
million from $108.1 million in the third quarter of fiscal 2016. As
a percentage of total net sales, gross profit was 67.0% compared to
third quarter gross profit of 67.8% in fiscal 2016.
- SG&A was $95.2 million compared to
$92.6 million in the third quarter of fiscal 2016. Third quarter
2017 SG&A included $0.7 million of non-recurring expenses
related to the transition to a public company. Third quarter 2016
SG&A included $2.3 million of non-recurring expenses related to
the Company’s IPO. Excluding these non-recurring expenses in both
years, SG&A as a percentage of total net sales was 58.4%
compared to 56.7% in the third quarter of fiscal 2016.
- Income from operations, inclusive of
non-recurring SG&A expenses, decreased to $13.3 million from
$15.5 million in the third quarter of fiscal 2016.
- Adjusted EBITDA* for the third quarter
of fiscal 2017 decreased by 13.3% to $23.0 million from $26.6
million in the third quarter of fiscal 2016. As a percentage of
total net sales, Adjusted EBITDA was 14.2% compared to 16.7% in the
third quarter of fiscal 2016.
- Interest expense decreased to $4.5
million from $4.8 million in the third quarter of fiscal 2016.
- Income tax expense was $2.8 million
compared to $2.8 million in the third quarter of fiscal 2016, and
the effective tax rate was 31.6% compared to 26.5% in the third
quarter of 2016.
- Diluted earnings per share was $0.14
compared to $0.18 in the third quarter of fiscal 2016.
- Adjusted diluted earnings per share*
for the third quarter of fiscal 2017, which excludes non-recurring
expenses, was $0.13 compared to $0.18 in the third quarter of
fiscal 2016. Adjusted diluted earnings per share uses a 40% tax
rate assumption for both periods.
For the thirty-nine weeks ended October 28, 2017:
- Total net sales increased 7.9% to
$509.5 million from $472.1 million in the thirty-nine weeks ended
October 29, 2016.
- Total company comparable sales, which
includes comparable store and direct to consumer sales, increased
by 5.6%.
- Direct to consumer net sales
represented 41.8% of total net sales, up from 41.2% in the
thirty-nine weeks ended October 29, 2016.
- Gross profit increased to $346.8
million from $322.5 million in the thirty-nine weeks ended October
29, 2016. As a percentage of total net sales, gross profit was
68.1% compared to 68.3% in the thirty-nine weeks ended October 29,
2016.
- SG&A was $289.3 million compared to
$273.9 million in the thirty-nine weeks ended October 29, 2016. For
the thirty-nine weeks ended October 28, 2017, SG&A included
$5.0 million of non-recurring expenses related to the IPO and
subsequent transition to a public company. For the thirty-nine
weeks ended October 29, 2016, SG&A included $6.8 million of
non-recurring expenses related to the Company’s IPO. Excluding
these non-recurring expenses in both years, SG&A as a
percentage of total net sales was 55.8% compared to 56.6% for the
thirty-nine weeks ended October 29, 2016.
- Income from operations, inclusive of
non-recurring SG&A expenses, increased to $57.5 million from
$48.6 million for the thirty-nine weeks ended October 29,
2016.
- Adjusted EBITDA* for the thirty-nine
weeks ended October 28, 2017 increased by 6.9% to $89.3 million
from $83.5 million in the thirty-nine weeks ended October 29, 2016.
As a percentage of total net sales, Adjusted EBITDA was 17.5%
compared to 17.7% for the thirty-nine weeks ended October 29,
2016.
- Interest expense was $14.5 million,
including $0.6 million of accelerated deferred financing
amortization due to the voluntary pre-payment of $20.0 million on
the term loan in the second quarter, compared to $13.6 million for
the thirty-nine weeks ended October 29, 2016.
- Income tax expense increased to $16.9
million from $12.9 million in the thirty-nine weeks ended October
29, 2016, and the effective tax rate was 39.4% compared to 37.0% in
the thirty-nine weeks ended October 29, 2016.
- Diluted earnings per share was $0.60
compared to $0.50 in the thirty-nine weeks ended October 29,
2016.
- Adjusted diluted earnings per share*
for the thirty-nine weeks ended October 28, 2017, which excludes
net non-recurring expenses, was $0.66 compared to $0.57 in the
thirty-nine weeks ended October 29, 2016. Adjusted diluted earnings
per share uses a 40% tax rate assumption for both periods.
The Company ended the third quarter fiscal 2017 with $25.8
million in cash. Inventory at the end of the third quarter fiscal
2017 increased to $85.4 million compared to $79.0 million at the
end of the third quarter fiscal 2016. The Company opened four
stores and closed three 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
For the fourth quarter of fiscal 2017, we expect total
comparable sales to increase 2.0% to 4.0%. On a 14-week basis, GAAP
diluted earnings per share are expected to be in the range of $0.05
to $0.07. Adjusted diluted earnings per share, which excludes
approximately $0.5 million of non-recurring expenses associated
with the Company’s transition to a public company, are expected to
be in the range of $0.06 to $0.08. Both GAAP and adjusted diluted
earnings per share will include approximately $0.4 million of
public company costs not incurred in 2016, and are inclusive of
approximately $0.01 related to the 53rd week of the fiscal year.
Adjusted diluted earnings per share assumes an income tax expense
rate of 40%.
For the full 2017 fiscal year, we expect total comparable sales
to increase 4.0% to 5.0%. On a 53-week basis, GAAP diluted earnings
per share are expected to be in the range of $0.64 to $0.66.
Adjusted diluted earnings per share, which excludes approximately
$5.5 million of non-recurring expenses associated with the
Company’s IPO and subsequent transition to a public company, are
expected to be in the range of $0.72 to $0.74. Both GAAP and
adjusted diluted earnings per share will include approximately $1.1
million of public company costs not incurred in 2016, and are
inclusive of approximately $0.01 related to the 53rd week.
The 53rd week of fiscal 2017, which is included in the earnings
per share outlook given above, is expected to contribute
approximately $9.0 million in sales and approximately $0.01 of
earnings per share.
Conference Call Information
A conference call to discuss third quarter fiscal 2017 results
is scheduled for today, December 5, 2017, 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 1580109 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 1580109. The telephone
replay will be available until Tuesday, December 19, 2017.
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. The information included
on our website 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:
- Adjusted EBITDA, which represents net
income (loss) plus interest expense, provision (benefit) for income
taxes, depreciation and amortization, equity-based compensation
expense, write-off of property and equipment, and other
non-recurring expenses, primarily consisting of outside legal and
professional fees associated with the initial public offering and
subsequent transition to a public company. We present Adjusted
EBITDA on a consolidated basis because management uses it as a
supplemental measure in assessing our operating performance, and we
believe that it is helpful to investors, securities analysts and
other interested parties as a measure of our comparative operating
performance from period to period. We also use Adjusted EBITDA as
one of the primary methods for planning and forecasting overall
expected performance of our business and for evaluating on a
quarterly and annual basis actual results against such
expectations. Further, we recognize Adjusted EBITDA as a commonly
used measure in determining business value and as such, use it
internally to report results.
- Adjusted Net Income, which represents
net income (loss) plus other non-recurring expenses, primarily
consisting of outside legal and professional fees associated with
the initial public offering and subsequent transition to a public
company. We present Adjusted Net Income on a consolidated basis
because management uses it as a supplemental measure in assessing
our operating performance, and we believe that it is helpful to
investors, securities analysts and other interested parties as a
measure of our comparative operating performance from period to
period.
- Adjusted Earnings per Share (“Adjusted
EPS”) represents Adjusted Net Income divided by the number of
shares outstanding. Adjusted EPS is presented as a supplemental
measure in assessing our operating performance, and we believe that
it is helpful to investors, securities analysts and other
interested parties as a measure of our comparative operating
performance from period to period.
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.
Consolidated Statements of Operations
and Comprehensive Income
(Unaudited)
(Amounts in thousands, except share and
per share data)
For the Thirteen Weeks Ended October 28, 2017
October 29, 2016 Net sales $ 161,975 $ 159,439
Cost of goods sold 53,479 51,334 Gross profit 108,496
108,105 Selling, general and administrative expenses 95,240
92,638 Operating income 13,256 15,467 Interest expense
4,496 4,844 Income before provision for income taxes
8,760 10,623 Provision for income taxes 2,766 2,815
Net income and total comprehensive income $ 5,994 $ 7,808 Net
income per common share attributable to common shareholders Basic $
0.14 $ 0.18 Diluted $ 0.14 $ 0.18 Weighted average number of common
shares outstanding Basic 41,731,765 43,747,944 Diluted 43,554,000
43,747,944
For the Thirty-Nine Weeks
Ended October 28, 2017 October 29,
2016 Net sales $ 509,473 $ 472,139 Cost of goods sold
162,721 149,673 Gross profit 346,752 322,466 Selling,
general and administrative expenses 289,284 273,882
Operating income 57,468 48,584 Interest expense 14,525
13,630 Income before provision for income taxes 42,943
34,954 Provision for income taxes 16,926 12,924 Net
income and total comprehensive income $ 26,017 $ 22,030 Net income
per common share attributable to common shareholders
Basic $ 0.62 $ 0.50 Diluted $ 0.60 $ 0.50 Weighted average number
of common shares outstanding Basic 41,933,244 43,747,944 Diluted
43,468,846 43,747,944
J.Jill, Inc.
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except common
unit and common share data)
October 28, 2017 January 28, 2017
Assets Current assets: Cash $ 25,806 $ 13,468 Accounts
receivable 9,062 3,851 Inventories, net 85,406 66,641 Prepaid
expenses and other current assets 16,385 18,559 Receivable from
related party — 1,922 Total current assets 136,659
104,441 Property and equipment, net 113,126 102,322 Intangible
assets, net 152,591 163,483 Goodwill 197,026 197,026 Other assets
743 1,033 Total assets $ 600,145 $ 568,305
Liabilities and Shareholders’ / Members’ Equity Current
liabilities: Accounts payable $ 56,524 $ 38,438 Accrued expenses
and other current liabilities 48,324 46,121 Current portion of
long-term debt 2,799 2,799 Total current liabilities
107,647 87,358 Long-term debt, net of discount and current portion
244,078 264,440 Deferred income taxes 71,169 73,511 Other
liabilities 27,526 20,132 Total liabilities
450,420 445,441 Commitments and contingencies
Shareholders’ / Members’ Equity Common stock, par value
$0.01 per share; 250,000,000 shares authorized;
43,747,944 shares issued and outstanding
at October 28, 2017
437 — Common units, zero par value, 1,000,000 units authorized,
issued and outstanding at
January 28, 2017
— — Contributed capital — 116,743 Additional paid-in capital
117,150 — Accumulated earnings 32,138 6,121 Total
shareholders’ / members’ equity 149,725 122,864 Total
liabilities and shareholders’ / members’ equity $ 600,145 $ 568,305
J.Jill, Inc.
Reconciliation of GAAP Net Income to
Adjusted EBITDA
(Unaudited)
(Amounts in thousands)
For the Thirteen Weeks Ended October 28, 2017
October 29, 2016 Net income $ 5,994 $ 7,808
Interest expense 4,496 4,844 Provision for income taxes 2,766 2,815
Depreciation and amortization 8,628 8,688 Equity-based compensation
expense (a) 278 173 Write-off of property and equipment (b) 229 —
Other non-recurring expenses (c) 658 2,261 Adjusted
EBITDA $ 23,049 $ 26,589
For the Thirty-Nine Weeks
Ended October 28, 2017 October 29, 2016 Net
income $ 26,017 $ 22,030 Interest expense 14,525 13,630 Provision
for income taxes 16,926 12,924 Depreciation and amortization 25,768
27,289 Equity-based compensation expense (a) 539 458 Write-off of
property and equipment (b) 569 384 Other non-recurring expenses (c)
4,964 6,824 Adjusted EBITDA $ 89,308 $ 83,539 (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. 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.
J.Jill, Inc.
Reconciliation of GAAP Net Income to
Adjusted Net Income
(Unaudited)
(Amounts in thousands, except share and
per share data)
For the Thirteen Weeks Ended October
28, 2017 October 29, 2016 Net income and
total comprehensive income $ 5,994 $ 7,808 Add: Provision for
income taxes 2,766 2,815 Income before provision for
income taxes 8,760 10,623 Add: Other non-recurring expenses(a)
658 2,261 Adjusted Income before provision for income
taxes 9,418 12,884 Less: Adjusted Tax Provision(b) 3,767
5,154 Adjusted net income $ 5,651 $ 7,730 Adjusted net
income per common share attributable to common shareholders Basic $
0.14 $ 0.18 Diluted $ 0.13 $ 0.18 Weighted average number of common
shares outstanding Basic 41,731,765 43,747,944 Diluted 43,554,000
43,747,944 (a): Represents items management believes
are not indicative of ongoing operating performance. 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. (b): The adjusted tax
provision for adjusted net income is estimated by applying 40% to
the adjusted income before provision for income taxes.
For the Thirty-Nine Weeks Ended October 28,
2017 October 29, 2016 Net income and total
comprehensive income $ 26,017 $ 22,030 Add: Provision for income
taxes 16,926 12,924 Income before provision for
income taxes 42,943 34,954 Add: Other non-recurring expenses(a)
4,964 6,824 Adjusted Income before provision for
income taxes 47,907 41,778 Less: Adjusted Tax Provision(b)
19,163 16,711 Adjusted net income $ 28,744 $ 25,067 Adjusted
net income per common share attributable to common shareholders
Basic $ 0.69 $ 0.57 Diluted $ 0.66 $ 0.57 Weighted average number
of common shares outstanding Basic 41,933,244 43,747,944 Diluted
43,468,846 43,747,944 (a): Represents items
management believes are not indicative of ongoing operating
performance. 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. (b): The adjusted tax provision for adjusted net income is
estimated by applying 40% to the adjusted income before provision
for income taxes.
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ICR, Inc. for J.JillInvestors:Caitlin Morahan/Joseph
Teklits, 203-682-8200investors@jjill.comorMedia:Alecia
Pulman/Kate Kohlbrenner, 203-682-8224jillpr@icrinc.com
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