In a Nutshell: J.Jill is still hard at work to secure the consent of its term loan lenders in connection with a transaction support sgreement inked with lenders holding over 70 percent of the its term loans.
The TSA represents the principal terms of a financial restructuring that would waive past non-compliance with the terms of its credit facilities, as well as provide the company with additional liquidity. The agreement, if all requirements are satisfied, would extend the maturity of certain participating debt by two years through May 2024. The financial restructuring would constitute an out-of-court restructuring.
If the required consents are not received in time for the company to complete the deal by Sept. 11, the TSA provides for the women’s specialty chain to file a pre-packaged Chapter 11 petition in a bankruptcy court. If that were to happen, the retailer has said that “all vendor claims would be unimpaired and paid in full.”
“We are very pleased that we have reached an agreement with more than 70.0% of our lenders and a majority of our shareholders that we expect will strengthen our financial position and better enable us to move forward in driving long-term growth for J.Jill,” Mark Webb, chief financial officer said.
As for the second quarter report, the women’s specialty chain did manage to narrow its losses for the three-month period.
“During the second quarter we continued to navigate through the challenges presented from the COVID-19 pandemic. With the majority of our stores temporarily closed through the first half of the quarter, our teams focused on driving sales through our direct to consumer channel. We also continued to tightly manage expenses as well as our working capital needs,” James S. Scully, interim CEO, said.
Net Sales: For the three months ended Aug. 1, net sales fell 48.7 percent to $92.6 million from $180.7 million. The company said direct-to-consumer net sales represented 71.6 percent of total net sales, versus the 42.6 percent attributable to DTC sales a year ago.
Inventory at the end of the quarter declined to $64.2 million from $7o million in the year-ago quarter. Gross profit was $55 million, down from $105.3 million last year, while gross margin was 59.4 percent, versus 58.3 percent a year ago. The lower margin rate last year was due actions taken to clear excess inventory.
J.Jill closed five stores in the quarter, and ended the reporting period with 281 stores in operation. It expects end the year with 275 doors in operation, with most of the store closures occurring in the third quarter.
For the six months, net sales fell 48.6 percent to $183.6 million from $357.2 million.
Earnings: The net loss for the quarter narrowed to $18.5 million, or 41 cents a diluted share, compared with a net loss of $96.7 million, or $2.21, a year ago.
On an adjusted basis, the diluted loss per share was 31 cents.
The company said it ended the quarter with $31.8 million in cash.
For the six months, the net loss narrowed slightly to $88.8 million, or $1.99 a diluted share, from $92.4 million, or $2.12, in the year-ago period.
CEO’s Take: “I am pleased with our disciplined approach to inventory management and believe we are taking the right actions to further strengthen our financial position,” Scully said.