J.Jill, Inc. JILL reported third-quarter fiscal 2024 results, wherein the top line came in line with the Zacks Consensus Estimate, while the bottom line beat the same. Both metrics showed year-over-year growth. 

J.Jill highlighted that its customers are currently more selective in their purchasing habits and that the company has not yet seen the robust return to full-price selling witnessed earlier this year. Nevertheless, the company remains dedicated to offering quality products, value and shopping experiences that resonate with its customers. Moreover, the company announced a new share repurchase program, indicating confidence in the business.

JILL’s Quarterly Performance: Key Metrics and Insights

J.Jill, an omnichannel apparel retailer, posted quarterly earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 80 cents and increased 7.2% from 83 cents reported in the prior-year period.

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Net sales of $151.3 million increased 0.3% from $150.9 million reported in the prior-year quarter. The metric came in line with the Zacks Consensus Estimate. This growth was primarily driven by a $2 million benefit from the calendar shift, caused by the 53rd week in fiscal 2023 and reduced merchandise returns. These gains were partially offset by higher promotional activity and lost sales due to the hurricane during the 13 weeks ended Nov. 2, 2024.

Total comparable sales, incorporating both comparable store and direct-to-consumer channels, declined 0.8% in the quarter. The metric was adversely affected by approximately 50 basis points (bps) due to disruptions caused by the hurricane during the quarter. 

The retail segment accounted for 54.3% of net sales, indicating a 0.2% year-over-year increase. Similarly, direct-to-consumer net sales, comprising 45.7% of net sales, grew 0.3% year over year.

Gross profit decreased 0.6% to $108 million from $108.6 million in the year-ago quarter. The gross margin contracted 60 bps to 71.4% compared with 72% in the third quarter of fiscal 2023. This contraction was attributed to increased promotional activities and higher freight costs, caused by elevated ocean freight container shipping rates during the 13 weeks ended Oct. 28, 2023.

Selling, general and administrative (SG&A) expenses of $88.6 million increased 2.5% year over year. As a percentage of net sales, SG&A expenses, excluding non-recurring items, increased 70 bps to 58.4% in the third quarter of fiscal 2024. This was attributable to marketing investments, wage inflation and incremental expenses associated with the Order Management System (OMS) project, partially offset by favorable management incentives.

Adjusted EBITDA totaled $26.8 million in the third quarter of fiscal 2024, down from $28.6 million in the prior-year quarter, indicating a decline of 6.1%. The adjusted EBITDA margin decreased 120 bps year over year to 17.7%.

Update on JILL Stores

The company ended the quarter with a total of 247 stores. During the period, J.Jill opened three new stores, reopened one store that was temporarily closed for relocation in the second quarter and temporarily closed one store due to hurricane damage, with its reopening date yet to be determined. JILL foresees a net increase of four stores by the end of fiscal 2024, excluding the impact of the hurricane closure.

JILL’s Financial Snapshot

J.Jill ended the fiscal third quarter with cash and cash equivalents of $38.8 million, long-term debt, net of discount and current portion of $69.1 million, and total shareholders’ equity of $103.3 million. Inventory totaled $61.7 million at the end of the fiscal quarter, an increase from $56.7 million in the same period last year.

During the 13 weeks ended Nov. 2, 2024, the net cash flow provided by operations was $19.1 million compared with $21.1 million in the prior-year period. Free cash flow for the period totaled $13.6 million, while capital expenditures amounted to $5.5 million. Management foresees capital expenditures to be around $22 million for fiscal 2024.

J.Jill's board of directors approved a share repurchase program, authorizing the company to buy back up to $25 million of shares in the next two years.

JILL announced a quarterly dividend of 7 cents per share, payable on Jan. 9, 2025, to its shareholders on record as of Dec. 26, 2024.

What to Expect From JILL in the Future?

For the fiscal fourth quarter, management foresees net sales to be down 4% to 6% compared with the fourth quarter of fiscal 2023. The company expects total comparable sales to be up 1% to 3%. JILL also anticipates adjusted EBITDA in the band of $12-$14 million.

For fiscal 2024, J.Jill forecasts net sales growth in the range of flat to up 1%. The company expects adjusted EBITDA to be in the range of $105-$107 million, indicating a year-over-year decrease of 5-7%. This guidance considers the negative impact of the loss of the 53rd week in fiscal 2023, amounting to $7.9 million in net sales and $2.2 million in adjusted EBITDA. Operating expenses of $2 million associated with the OMS project are also factored into this guidance.

Excluding the impact of the 53rd week as well as the operating expense investment in the OMS project, JILL estimates net sales growth of 1-2% and adjusted EBITDA decline of 2-4% for fiscal 2024. 

This Zacks Rank #3 (Hold) company has gained 8% in the past three months compared with the industry’s 14.3% growth.

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