J.Jill Inc. seems to know what fashion the older female consumer is looking for.
In a Nutshell: A higher-income and less inflation-sensitive customer, coupled with on-the-mark fashion, helped J.Jill boost second-quarter sales.
Strong first quarter momentum spilled over into Q2, where customers continued shopping higher-AUR novelty fashion with little resistance to elevated prices.
“We saw a strong start to the quarter over Mother’s Day and heard from our store associates that she was generally stocking up early for her seasonal wardrobe and shopping for a summer packed with events and travel,” CEO Claire Spofford told analysts during a conference call Thursday.
Unlike some other chains that saw declines in mid-June, J.Jill found a sales slowdown after Mother’s Day, Spofford said.
“As the weather turns and we continue to flow newness, we’re staying close to her and our field organization on her behaviors and shopping intent,” Spofford said. “We feel confident based on what we’ve heard that she’s coming back to refresh her fall wardrobe.”
The start of the third quarter saw the company working on growing its customer base through a new “Welcome Everybody” campaign that focuses on size inclusivity. While the chain has always offered plus sizes, they were in a separate section in stores, and some options were available only online. The initiative brought some of the online-only size offerings into the stores, although sizes 3X-4X (26-28) will still be only available online. In addition to merging misses and women’s collections, prices were tweaked so customers are paying the same for an item regardless of size.
J.Jill Inc. has closed six doors this year and plans to close a net 10 to 14 locations, including the two stores opening in the fourth quarter.
Net Sales: For the three months ended July 30, net sales rose 1 percent to $160.3 million from $159.2 million. Comparable sales rose 0.8 percent, driven by sales in the store channel.
Store sales were up 2 percent on higher AURs and reduced promotions. Direct sales, 46 percent of total sales, dipped 0.7 percent.
Chief financial officer Mark Webb said inventories were up 12.2 percent at quarter-end, driven by elevated in-transit goods after moving up deliveries a week or two to limit air freight usage.
The quarterly gross margin was 70.1 percent, up 150 basis points from a year ago as strategic price hikes and mindful promotions offset product cost inflation and last year’s massive freight charges, he said.
For the six months, net sales rose 10 percent to $317.4 million from $288.3 million.
Earnings: Net income was $17.8 million, or $1.25 a diluted share, against a net loss of $24.6 million, or $1.98, in the year-ago quarter.
For the third quarter, J.Jill forecasted revenues at flat to down 3 percent. Webb said the company reaffirmed prior full year outlook for annual sales to grow “modestly.”
For the six months, net income was $32.3 million, or $2.27 a diluted share, against a net loss of $43 million, or $3.88, in the same year-ago period.
CEO’s Take: “We want every woman to be able to find her desired fit in products that are uniquely relevant to her with the confidence that J.Jill has what she’s looking for in beautiful styles and fabrication,” Spofford said.