J.Jill, Inc. (NYSE: JILL) Q1 2025 Earnings Call | 06/11/2025

Here's a summary of the J. Jill First Quarter Fiscal Year 2025 Earnings Conference Call:

J. Jill Q1 FY25 Earnings Call Summary

J. Jill faced a challenging first quarter in fiscal year 2025, impacted by adverse weather, the cutover to a new Order Management System (OMS), and a volatile macroeconomic environment with uncertain global trade policies. Despite these headwinds, the company exceeded its EBITDA guidance primarily due to disciplined expense management. The call also marked the introduction of Mary Ellen Coyne as the new CEO.

Key Financial Highlights (Q1 FY25 vs. Q1 FY24):

• Total Company Sales: Approximately $154 million, down 4.9%.
• Total Company Comparable Sales: Down 5.7%.
• OMS Cutover Impact: Resulted in a $2 million negative sales impact.
• Store Sales: Down 4.4%.
• Direct Sales: Down 5.4%, representing 47% of total sales. The direct channel was particularly affected by the OMS cutover in March and customers primarily shopping markdowns in April.
• Gross Profit: Approximately $110 million, down $7 million.
• Gross Margin: 71.8%, down 110 basis points, driven by a higher mix of markdown sales (especially in direct) and increased full-price promotional rates.
• SG&A Expenses: Approximately $91 million, up from $89 million, due to costs for new stores, OMS-related costs ($1.6 million vs. $0.7 million last year), and merit increases, partially offset by lower incentive accruals.
• Adjusted EBITDA: $27.3 million, down from $35.6 million.
• Interest Expense: $2.8 million, significantly down from $6.4 million.
• Adjusted Net Income Per Diluted Share: $0.88 (down from $1.22), affected by higher diluted share count (15.4 million vs. 14.4 million) partially offset by share repurchases.
• Cash from Operations: $5.3 million generated.
• Ending Cash: $31 million with zero ABL borrowings.
• Inventory: Total inventories up 14% (normalized up ~5% excluding an extra week due to Red Sea disruption response). Higher seasonal basic and basic full-price inventory noted.
• Capital Expenditures: $2.7 million.
• Store Count: Closed 3 stores, no new openings in Q1. Ended with 249 stores (vs. 244 in Q1 FY24).

Strategic & Operational Updates:

• New CEO - Mary Ellen Coyne: Introduced as the new CEO, bringing three decades of retail experience in women's apparel. She emphasized J. Jill's loyal customer base and opportunities in multi-channel expansion, product elevation, and new categories. She is currently assessing the business and will provide more insights in the September earnings call.
• OMS Implementation: Successfully cut over to a new OMS system in March. While it had a slightly larger-than-anticipated impact on Q1 performance, it is now stable and a modern platform for scaling. The company is initiating work to enable "Ship From Store" capabilities in the latter half of FY25.
• Inventory Management: Took swift actions to reduce inventory investments in floor sets starting Q3 to align with current demand. Expects to clear inventories through promotions in Q2 to maintain health.
• Tariffs: Assumes tariffs will remain at 10% on all countries and 30% on China for the rest of the year. Expects to mitigate most incremental product costs through vendor negotiations, on-order adjustments, and strategic price increases on select items.
• Marketing: Maintaining current run-rate marketing spend to support the customer file, reviewing mix and creative for maximum impact.
• New Stores Outlook: Reduced expected net new store openings for FY25 to 1-5 (from 5-10) due to some deals pushing into 2026 and uncertainties in planning/permitting. Still comfortable with a 50-store opportunity by end of 2029. Newer stores are performing in line with expectations, though some in smaller markets may take longer to ramp.
• Shareholder Return: Maintained quarterly dividend of $0.08 per share. Will continue opportunistic share repurchases judiciously until trend visibility improves.
• Q2 Outlook (Quarter-to-Date through May): Total company sales are down mid-single digits. If this trend continues, significant SG&A deleverage and further gross margin pressure are expected.

Guidance Withdrawal: Due to increased macroeconomic uncertainty and the recent CEO transition, J. Jill is withdrawing its prior full-year guidance and temporarily suspending its practice of providing forward guidance on most metrics.