Deutsche Bank Confident J. Jill Will Continue To Outperform Specialty Apparel Peers

Popular women’s apparel retailer J.Jill Inc JILL went public in early March. Deutsche Bank has jumped on board, initiating coverage with a Buy rating and $16 price target.

The firm sees J. Jill as a specialty retailer that is positioned well to outperform its peers.

“Retail is evolving, to put it lightly, and differentiated models are needed to thrive in the new age,” analyst Paul Trussell said.

“J.Jill’s highly profitable direct channel at 43% sales penetration positions it as a top tier retailer. Combined with a small but productive store fleet, a basic but frequently refreshed assortment, and a large but actively growing customer file,” added Trussell.

Deutsche Bank sees the company as unique among its specialty apparel peers, in that its model isn't predicated on strong comps at the retail level given its direct channel, which delivers significantly higher EBIT margins of around 1000 basis points. Direct penetration is expected to reach over 50 percent by FY2019.

Getting Jilly With It

J.Jill is also ramping up its Omni-channel initiatives that are expected to drive additional sales gains. Omni-channel shoppers spend on average around three times more than single channel shoppers. The brand has also displayed solid customer retention around 60 percent in FY2016, and a active customer base that has grown 23 percent since FY2014.

While the women’s retailer currently operates 275 stores, there is a long-term target of 375 in place, aiming for 10-15 new stores per year.

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