Net Sales of $149.4 Million vs. $157.1 Million in Q1 FY2022; Total Company Comparable Sales Down 2.7% vs. Q1 FY2022

Operating Income Increase of 6.3% and Operating Income Margin increase of 180bps vs. Q1 FY2022

Inventory Down 14.9% vs. End of Q1 FY2022

Successfully Completed Debt Refinancing Transactions

J.Jill, Inc. (NYSE:JILL) today announced financial results for the first quarter ended April 29, 2023.

Claire Spofford, President and Chief Executive Officer of J.Jill, Inc. stated, "Our first quarter results demonstrate the ongoing execution of our disciplined operating model especially as we anniversaried a strong comparison to last year. Our customer continues to gravitate to the newness we are flowing regularly in our assortment, but has become increasingly discerning with her spending decisions in light of the evolving macro environment. As we move into the remainder of the year, we will maintain our disciplined approach to managing the business as we continue to navigate a dynamic environment."

For the first quarter ended April 29, 2023:

Total net sales for the thirteen weeks ended April 29, 2023 were down 4.9% to $149.4 million compared to $157.1 million for the thirteen weeks ended April 30, 2022.
Total company comparable sales, which includes comparable store and direct to consumer sales, decreased by 2.7%.
Direct to consumer net sales, which represented 45.0% of sales, were down 7.7% compared to the first quarter of fiscal 2022.
Gross profit was $107.5 million compared to $109.5 million in the first quarter of fiscal 2022. Gross margin was 72.0% compared to 69.7% in the first quarter of fiscal 2022. The year over year gross margin increase benefited from lower freight costs compared to the first quarter of fiscal 2022.
SG&A was $82.1 million compared to $85.6 million in the first quarter of fiscal 2022. In comparing the first quarter of fiscal 2023 to fiscal 2022, excluding non-recurring and other one-time costs, SG&A as a percentage of total net sales was 55.0% compared to 54.6% in the first quarter of fiscal 2022.
Income from operations was $25.4 million compared to $23.9 million in the first quarter of fiscal 2022. Adjusted Income from Operations*, which excludes adjustments for costs to exit retail stores as well as impairment charges was $25.4 million compared to $23.8 million in the first quarter of fiscal 2022.
Interest expense was $6.1 million compared to $4.5 million in the first quarter of fiscal 2022.
During the first quarter of fiscal 2023, the Company recorded an income tax provision of $2.0 million compared to $5.0 million in the first quarter of fiscal 2022 and the effective tax rate was 29.9% compared to 25.8% in the first quarter of fiscal 2022.
Net income was $4.6 million compared to $14.4 million in the first quarter of fiscal 2022.
Net Income per Diluted Share was $0.32 compared to $1.02 in the first quarter of fiscal 2022 including the impact of non-recurring items and a $12.7 million Loss on debt refinancing as part of the Company's Term Loan refinancing in the first quarter of fiscal 2023. Excluding the impact of these items, Adjusted Net Income per Diluted Share* in the first quarter of fiscal 2023 was $0.96 compared to $1.02 in the first quarter of fiscal 2022. The decrease in the first quarter of fiscal 2023 was driven by higher interest expense.
Adjusted EBITDA* for the first quarter of fiscal 2023 was $31.9 million compared to $31.3 million in the first quarter of fiscal 2022. Adjusted EBITDA margin* for the first quarter of fiscal 2023 was 21.3% compared to 19.9% in the first quarter of fiscal 2022.
The Company opened 2 new stores in the first quarter of fiscal 2023 and ended the quarter with 245 stores.

Balance Sheet Highlights

The Company successfully refinanced its funded debt during the quarter, reducing principal outstanding by approximately $50 million dollars and extending maturity to May 2028.
The Company ended the first quarter of fiscal 2023 with $27.9 million in cash and $34.2 million of total availability under its revolving credit agreement.
Inventory at the end of the first quarter of fiscal 2023 decreased 14.9% to $53.8 million compared to $63.2 million at the end of the first quarter of fiscal 2022.

*Non-GAAP financial measures. Please see "Non-GAAP Financial Measures" and "Reconciliation of GAAP Net Income to Adjusted EBITDA, Adjusted Income from Operations and Adjusted Net Income" for more information.

Outlook

For the second quarter of fiscal 2023, the Company expects revenues to be down mid-single digits compared to the second quarter of fiscal 2022, and for Adjusted EBITDA to be in the range of $26.0 million and $31.0 million.

For fiscal 2023, the Company now expects Annual Adjusted EBITDA dollars to be down mid-single digits compared to fiscal 2022, including approximately $2 million benefit from the 53rd week. The Company continues to expect total capital expenditures of about $18.0 million and a flat store count to end fiscal 2023.

Conference Call Information

A conference call to discuss first quarter 2023 results is scheduled for today, June 7, 2023, at 8:00 a.m. Eastern Time. Those interested in participating in the call are invited to dial (888) 330-3391 or (646) 960-0845 if calling internationally. Please dial in approximately 10 minutes prior to the start of the call and reference Conference ID 2289963 when prompted. A live audio webcast of the conference call will be available online at http://investors.jjill.com/Investors-Relations/News-Events/events.

A taped replay of the conference call will be available approximately two hours following the call and can be accessed both online and by dialing (800) 770-2030 or (647) 362-9199. The pin number to access the telephone replay is 2289963. The telephone replay will be available until Wednesday, June 14, 2023.

About J.Jill, Inc.

J.Jill is a national lifestyle brand that provides apparel, footwear and accessories designed to help its customers move through a full life with ease. The brand represents an easy, thoughtful, and inspired style that celebrates the totality of all women and designs its products with its core brand ethos in mind: keep it simple and make it matter. J.Jill offers a high touch customer experience through over 200 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston. For more information, please visit www.jjill.com or http://investors.jjill.com. The information included on our websites 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, impairments of goodwill, intangible assets and other long-lived assets, fair value adjustments of warrants and derivatives and other non-recurring expenses and one-time items. 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. We also use Adjusted EBITDA margin which represents, for any period, Adjusted EBITDA as a percentage of net sales.
Adjusted Income (Loss) from Operations, which represents operating income (loss) plus impairments of goodwill, intangible assets and other long-lived assets and other non-recurring expense and one-time items. We present Adjusted Income (Loss) from Operations 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 Net Income (Loss), which represents net income (loss) plus impairments of goodwill, intangible assets and other long-lived assets, fair value adjustments of warrants and derivatives and other non-recurring expenses and one-time items. We present Adjusted Net Income (Loss) 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 Net Income per Diluted Share ("Adjusted Diluted EPS") represents Adjusted Net Income (Loss) divided by the number of fully diluted shares outstanding. Adjusted Diluted 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 EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Diluted EPS are useful in evaluating our business, they are non-GAAP financial measures that have limitations as analytical tools. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Diluted EPS should not be considered alternatives to, or substitutes for, Net Income (Loss), Income (Loss) from Operations or Net Income (Loss) per Diluted Share, which are calculated in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Diluted 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 EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Diluted EPS to Net Income (Loss), Income (Loss) from Operations and Net Income (Loss) per Diluted Share, the most directly comparable GAAP financial measures, under "Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA," "Reconciliation of GAAP Operating Income to Adjusted Income from Operations" and "Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income" and not rely solely on Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss), Adjusted Diluted 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." All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements, including, among others, 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," "goal," "target" (although not all forward-looking statements contain these identifying words) 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 inherently subject to a number of risks, uncertainties, potentially inaccurate assumptions 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, but are not limited to, regional, national or global political, economic, business, competitive, market and regulatory conditions, including risks regarding: (1) our ability to successfully expand and increase sales, including by opening new retail stores on a profitable basis, to maintain and enhance a strong brand image, and to optimize our omnichannel operations; (2) changes in consumer confidence, preference and spending, and our ability to adapt to such changes; (3) the competitive environment we operate in; (4) post-pandemic changes in consumer behavior and the timeline of overall economic recovery; (5) our level of indebtedness and ability to work with lenders to pursue options to refinance; and (6) other factors that may be described in our filings with the Securities and Exchange Commission (the "SEC"), including the factors set forth under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023. You are encouraged to read our filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. We caution investors, potential investors and others not to place considerable reliance on the forward-looking statements in this press release and in the oral statements made by our representatives. Any such forward-looking statement 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
	April 29, 2023		April 30, 2022
Net sales	$	149,420	$	157,069
Costs of goods sold		41,880		47,606
Gross profit		107,540		109,463
Selling, general and administrative expenses		82,146		85,578
Operating income		25,394		23,885
Loss on debt refinancing		12,702		—
Interest expense, net		5,057		3,658
Interest expense, net - related party		1,074		802
Income before provision for income taxes		6,561		19,425
Income tax provision		1,965		5,010
Net income and total comprehensive income	$	4,596	$	14,415
Net income per common share attributable to common shareholders
Basic	$	0.32	$	1.04
Diluted	$	0.32	$	1.02
Weighted average number of common shares outstanding
Basic		14,250,811		13,874,546
Diluted		14,510,008		14,171,082


J.Jill, Inc. Consolidated Balance Sheets (Unaudited) *(Amounts in thousands, except common share data)*


	April 29, 2023			January 28, 2023
Assets
Current assets:
Cash and cash equivalents	$	27,891		$	87,053
Accounts receivable		8,153			7,039
Inventories, net		53,788			50,585
Prepaid expenses and other current assets		17,313			16,143
Total current assets		107,145			160,820
Property and equipment, net		53,791			53,497
Intangible assets, net		71,452			73,188
Goodwill		59,697			59,697
Operating lease assets, net		115,564			119,118
Other assets		318			97
Total assets	$	407,967		$	466,417
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	41,858		$	39,306
Accrued expenses and other current liabilities		38,846			49,730
Current portion of long-term debt		8,750			3,424
Current portion of operating lease liabilities		34,160			34,527
Total current liabilities		123,614			126,987
Long-term debt, net of discount and current portion		151,787			195,517
Long-term debt, net of discount and current portion - related party		—			9,719
Deferred income taxes		9,956			10,059
Operating lease liabilities, net of current portion		118,361			123,101
Other liabilities		924			1,253
Total liabilities		404,642			466,636
Commitments and contingencies
Shareholders' Equity (Deficit)
Common stock, par value $0.01 per share; 50,000,000 shares authorized; 10,580,802 and 10,165,361 shares issued and outstanding at April 29, 2023 and January 28, 2023, respectively		107			102
Additional paid-in capital		210,948			212,005
Accumulated deficit		(207,730	)		(212,326	)
Total shareholders' equity (deficit)		3,325			(219	)
Total liabilities and shareholders' equity (deficit)	$	407,967		$	466,417


J.Jill, Inc. Reconciliation of GAAP Net Income to Adjusted EBITDA (Unaudited) *(Amounts in thousands)*


	For the Thirteen Weeks Ended
	April 29, 2023			April 30, 2022
Net income	$	4,596		$	14,415
Interest expense, net		5,057			3,658
Interest expense, net - related party		1,074			802
Income tax provision		1,965			5,010
Depreciation and amortization		5,571			6,713
Equity-based compensation expense ^(a)		878			742
Write-off of property and equipment ^(b)		20			92
Adjustment for costs to exit retail stores ^(c)		—			(243	)
Loss on debt refinancing ^(d)		12,702			—
Impairment of long-lived assets ^(e)		—			108
Adjusted EBITDA	$	31,863		$	31,297
Net sales	$	149,420		$	157,069
Adjusted EBITDA margin		21.3	%		19.9	%

(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 grant.
(b)		Represents the net gain or loss on the disposal of fixed assets.
(c)		Represents non-cash adjustments associated with exiting store leases earlier than anticipated.
(d)		Represents loss on the repayment of Priming Term Loan Credit Agreement and the Subordinated Term Loan Credit Agreement.
(e)		Represents impairment of long-lived assets related to leasehold improvements.


J.Jill, Inc. Reconciliation of GAAP Operating Income to Adjusted Income from Operations (Unaudited) *(Amounts in thousands)*


	For the Thirteen Weeks Ended
	April 29, 2023		April 30, 2022

Operating income	$	25,394	$	23,885
Adjustment for costs to exit retail stores ^(a)		—		(243	)
Impairment of long-lived assets ^(b)		—		108
Adjusted income from operations	$	25,394	$	23,750

(a)		Represents non-cash adjustments associated with exiting store leases earlier than anticipated.
(b)		Represents impairment of long-lived assets related to leasehold improvements.


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
	April 29, 2023		April 30, 2022
Net income and total comprehensive income	$	4,596	$	14,415
Add: Income tax provision		1,965		5,010
Income before provision for income tax		6,561		19,425
Add: Adjustment for costs to exit retail stores ^(a)		—		(243	)
Add: Loss on debt refinancing ^(b)		12,702		—
Add: Impairment of long-lived assets ^(c)		—		108
Adjusted income before income tax provision		19,263		19,290
Less: Adjusted tax provision ^(d)		5,374		4,900
Adjusted net income	$	13,889	$	14,390

Adjusted net income per share attributable to common shareholders
Basic	$	0.97	$	1.04
Diluted	$	0.96	$	1.02
Weighted average number of common shares

Basic		14,250,811		13,874,546
Diluted		14,510,008		14,171,082

(a)		Represents non-cash adjustments associated with exiting store leases earlier than anticipated.
(b)		Represents loss on the repayment of Priming Term Loan Credit Agreement and the Subordinated Term Loan Credit Agreement.
(c)		Represents impairment of long-lived assets related to leasehold improvements.
(d)		The adjusted tax provision for adjusted net income is estimated by applying a rate of 27.9% for the first quarter of fiscal 2023 and 25.4% for the first quarter of fiscal 2022 to the adjusted net income before income tax provision.

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J.Jill, Inc. Announces First Quarter 2023 Results