J.Jill Exceeds Q2 Expectations, Lowers 2024 Guidance Due To Changing Consumer Behavior

J. Jill Inc JILL reported a second-quarter sales decline of 0.9% year-over-year to $155.24 million, beating the analyst consensus estimate of $154.23 million.

Total company comparable sales increased by 1.7%. Direct-to-consumer net sales climbed 3.6% Y/Y, constituting 47.1% of total sales. Adjusted EPS of $1.05 beat the consensus of $0.91.

Gross profit fell 2.7% year over year to $109.39 million, and the gross margin contracted 120 bps to 70.5%. Operating margin contracted 307 bps to 14.8%, and operating income for the quarter declined 17.9% to $23.022 million.

As of August 3, 2024, J.Jill held $28.47 million in cash and equivalents. Operating cash flow for the quarter totaled $16.38 million, with a free cash flow of $14.3 million.

Adjusted EBITDA for the quarter was $30.2 million versus $34.6 million last year, and the margin was 19.4%, down compared to 22.1% YoY.

Inventory at the end of the second quarter was $52.7 million, compared to $45.7 million last year. The inventory increase from last year was due to timing and the decision to expedite shipping by a week.

The company opened one new store and temporarily closed another for relocation during the quarter, keeping the total store count unchanged at 244.

“While we have seen changes in consumer behavior during the summer months which has extended into the start of the third quarter and reflected in our updated guidance, we are continuing to operate the business with great discipline and continue to realize healthy margin performance and deliver significant cash flow generation," commented Claire Spofford, President and Chief Executive Officer.

Q3 Outlook: JILL expects net sales to be down 1% to up 2% year-over-year and Adjusted EBITDA to be in the range of $23.0 million to $27.0 million.

2024 Outlook: The company lowered its guidance, expecting net sales to be about flat to up 1% (prior view 1% – 3% growth) compared to fiscal 2023, with Adjusted EBITDA declining by 4% to 9% (prior view 1% – 3% decline).

Price Action: JILL shares are trading lower by 6.13% at $30.27 at the last check Wednesday.

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