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Here We Go Again? J.Jill Reports Big Exec Bonus, $70M Loss As Loan Deadline Looms

J.Jill dished a near million-dollar bonus to a top executive as it reported a first-quarter loss on the eve of a key financial deadline that already has been extended once—and could augur whether the chain is the next in fashion to face a bankruptcy judge.

In a Nutshell: J.Jill paid chief financial officer Mark Webb a cash retention award equal to his annual base salary and annual target bonus totaling  $875,385.00, according to a Tuesday Securities and Exchange Commission filing. He’s required to repay the funds if he leaves the company before July 30, 2021, barring a qualifying termination.

Meanwhile, Brian Beitler, who was named chief marketing and brand development officer in August 2018, submitted his resignation on July 22, effective Aug. 1.

On June 15, J.Jill entered into two forbearance agreements with its ABL and term loan lenders after falling out of compliance with specific covenants tied to both loans. On July 23, it gained an extension on both forbearances, and on Thursday the company said it has another extension until Aug. 6 from July 30 to give the chain more time to negotiate with lenders.

J.Jill said it would not be providing any financial guidance given the uncertainty around COVID-19 but expects to complete 11 store closures during the second quarter and end the year with 275 doors.

Given the impact of the coronavirus and J.Jill’s pre-pandemic debt load, credit watchdogs were already concerned about the chain’s ability to refinance. And with the forbearance agreements in place, speculation has grown in recent weeks that a bankruptcy filing could be on the horizon.

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Net Sales: Net sales dropped 48.4 percent to $91.0 million from $176.5 million.

J.Jill said direct-to-consumer net sales represented 61.4 percent of total net sales, versus 41.9 percent in the year-ago quarter.

Gross profit fell $50.2 million in the quarter, while the gross margin for the period was 55.1 percent versus 65.9 percent a year ago. Both gross profit and gross margin were impacted by aa $5.2 million charge related to potential future liability payments.

Earnings: The apparel retailer reported a net loss of $70.3 million, or $1.58 a diluted share, from net income of $4.4 million, or 10 cents, in the year-ago quarter. On an adjusted basis, the loss was 65 cents for the quarter.

CEO’s Take: “As we previously disclosed, we took quick and decisive action during the period to leverage our direct channel while focusing on cost management and cash generation…. As of today, essentially all of our stores are reopened with enhanced health and safety protocols, and we are thrilled to once again serve our customer with the shopping experience she knows and loves from J.Jill. As we look ahead, we are continuing to monitor the evolving macro backdrop while working to strengthen our financial position,” interim CEO James S. Scully said.