Despite tough comparisons and all the macro-economic challenges, J. Jill turned profitable last year, saw respectable sales gains and sees market share opportunities this year while planning cautiously.
“We had a really solid 2022,” Claire Spofford, president and chief executive officer of J. Jill, told WWD. “We navigated a lot of turbulence, but the team stayed focused, we stayed on strategy and continued to have a good beat with our product and our customer.
“As we go into ’23, we’re well aware that there’s a lot of uncertainty in the macro environment. And so we’re continuing to be kind of cautious and disciplined in terms of inventory. We also feel that in ’22, we laid the groundwork work for some exciting growth opportunities, and started to get some traction on those. So we feel like we’ve got a nice runway for growth, profitable growth going forward.”
Spofford was interviewed right after the company reported a decline in net income to $1 million, or $0.07 per diluted share in the quarter ended Jan. 28, compared to $3.6 million, or $0.25 per diluted share, in the year-ago fourth quarter.
Adjusted earnings before interest, taxes, depreciation and amortization for the fourth quarter was $15 million compared to $15.2 million in the fourth quarter of fiscal 2021.
Net sales were up 1.7 percent to $147.7 million compared to $145.2 million for the year-ago period. Comparable sales rose 5.3 percent.
Inventory at the end of the fourth quarter was $50.6 million compared to $56 million at the end of the year-ago fourth quarter.
“I’ve said before that J.Jill is one of the best kept secrets in the business, but things are changing somewhat. There’s room to raise the profile and get the brand out there more. There’s relatively low awareness. We have fewer stores than a lot of our competitors. We ended the year with 243. But we opened our first store in three years in Q4 in Granger, Indiana, and we have two more openings planned for this quarter.” She expects to end the year with the store count remaining flat.
Spofford said J.Jill has been “modernizing,” adding, “We have a fresh look in the way we’re styling our products when we shoot them. The team is doing a really nice job of signaling the newness and the freshness.”
Women are responding to other initiatives, Spofford added. Last August, J.Jill launched price parity across its entire size range, so any style, regardless of its size, is priced the same. J. Jill’s “Welcome Everybody” campaign touts inclusivity and an expanded size range. In the fall, J.Jill launched its first Pure Jill Elements collection, the latest iteration of the Pure Jill subbrand. Pure Jill is priced roughly 30 percent higher and emphasizes organic shapes, nature-inspired colors, indigos, soft fabrics and relaxed silhouettes. “The fabrications are more special and details are a little bit more artisanal.
We’re focused on targeting women in the 45 to 65 year old range,” Spofford said. “Obviously, we always want to bring that next group of customers in and one of the great things about the inclusive sizing initiative is that we are bringing in a slightly younger and very valuable customer. And when I say slightly younger, I mean closer to the lower end of our target range.”
She said the J.Jill collection strikes “a nice balance” between more basic products such as pima knits, denim and linen, as well as novelty prints, embroideries and dresses.
Spofford added, “In 2023, we expect to build on this progress while maintaining the disciplined approach to inventory and expense management that we have demonstrated over the past eight quarters. While we are cautious with respect to our outlook for this year given the ongoing macro-related headwinds, we remain focused on positioning J. Jill for long-term profitable growth.”
For all of 2022, net Income was $42.2 million compared to a net loss of $28.1 million in 2021. Operating income was $78.7 million compared to $58.7 million for the year.
Adjusted EBITDA for the year was $109.4 million compared to $91.8 million in 2021.
Net sales were up 5.1 percent to $615.3 million compared to $585.2 million in 2021.
Total company comparable sales, which includes comparable store and direct-to-consumer sales, increased by 6.5 percent for the year.
For the first quarter of fiscal 2023, the company expects revenues to be down in the mid-single digits compared to the first quarter of fiscal 2022, and for adjusted EBITDA to range from $25 million to $30 million.
“Q1 is a really tough compare. We had a really strong Q1 last year. So we’re being appropriately cautious. We continue to buy inventory with discipline. We know that we’ve got opportunities for growth. We’ve got some traction, but we don’t want to get ahead of ourselves given the uncertainty in the macro environment.”
For the year ahead, the company expects annual adjusted EBITDA dollars to be approximately flat, total capital expenditures between $18 million and $20 million.