QUINCY, Mass.–(BUSINESS WIRE)–J.Jill, Inc. (NYSE:JILL) today announced financial results for the fourth quarter and fiscal year ended January 28, 2023.
Claire Spofford, President and Chief Executive Officer of J.Jill, Inc. stated, “We are pleased with our strong finish for the year as we delivered better than expected top and bottom line results for the fourth quarter and full year. Throughout fiscal 2022, our teams did an exceptional job in delivering strong operating results while executing against our strategic initiatives including the launch of our Welcome Everybody campaign.”
Ms. Spofford, continued, “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 the fourth quarter ended January 28, 2023:
- Total net sales for the thirteen weeks ended January 28, 2023 were up 1.7% to $147.7 million compared to $145.2 million for the thirteen weeks ended January 29, 2022.
- Total company comparable sales, which includes comparable store and direct to consumer sales, increased by 5.3% for the fourth quarter of fiscal 2022.
- Direct to consumer net sales were down 2.5% compared to the fourth quarter of fiscal 2021 and represented 49.9% of total net sales.
- Gross profit was $95.1 million compared to $92.7 million in the fourth quarter of fiscal 2021. Gross margin was 64.4% compared to 63.9% in the fourth quarter of fiscal 2021. The 50 basis points increase was driven by freight favorability which more than offset margin pressure from additional promotional activity in the quarter.
- SG&A was $87.3 million compared to $85.2 million in the fourth quarter of fiscal 2021. In comparing the fourth quarter of fiscal 2022 to fiscal 2021, the fourth quarter of fiscal 2021 had a one time $0.3 million benefit. Excluding the non-recurring and other one-time costs from both periods, SG&A as a percentage of total net sales was 59.1%, compared to 58.9% in the fourth quarter of fiscal 2021.
- Operating income was $7.8 million compared to $7.5 million in the fourth quarter of fiscal 2021. Operating income margin for the fourth quarter of fiscal 2022 was 5.3% compared to 5.2% in the fourth quarter of fiscal 2021. Adjusted Income from Operations*, which excludes non-recurring items and impairment charges, was $7.8 million compared to $7.3 million in the fourth quarter of fiscal 2021.
- Interest expense was $5.7 million compared to $4.4 million in the fourth quarter of fiscal 2021.
- During the fourth quarter of fiscal 2022, the Company recorded an income tax provision of $1.1 million compared to an income tax benefit of $0.4 million in the fourth quarter of fiscal 2021 and the effective tax rate was 51.2% compared to (13.0%) in the fourth quarter of fiscal 2021.
- Net Income was $1.0 million compared to $3.6 million in the fourth quarter of fiscal 2021.
- Net Income per Diluted Share was $0.07 compared to $0.25 in the fourth quarter of fiscal 2021 including the impact of non-recurring items. Excluding the impact of these items, Adjusted Net Income per Diluted Share* in the fourth quarter of fiscal 2022 was $0.11 compared to $0.15 in the fourth quarter of fiscal 2021.
- Adjusted EBITDA* for the fourth quarter of fiscal 2022 was $15.0 million compared to $15.2 million in the fourth quarter of fiscal 2021. Adjusted EBITDA margin* for the fourth quarter of fiscal 2022 was 10.2% compared to 10.5% in the fourth quarter of fiscal 2021.
- The Company closed 5 stores and opened 1 new store in the fourth quarter of fiscal 2022 ending the quarter with 243 stores.
For the year ended January 28, 2023:
- Total net sales were up 5.1% to $615.3 million compared to $585.2 million for the year ended January 29, 2022.
- Total company comparable sales, which includes comparable store and direct to consumer sales, increased by 6.5% for the year ended January 28, 2023.
- Direct to consumer net sales were down 1.2% over fiscal 2021 and represented 46.8% of total net sales, compared to 49.8% for the year ended January 29, 2022.
- Gross profit was $422.1 million compared to $394.4 million for the year ended January 29, 2022. Gross margin was 68.6% compared to 67.4% for the year ended January 29, 2022. The year over year gross margin increase was driven by strong full price selling and reduced promotions.
- SG&A was $341.9 million compared to $335.7 million for the year ended January 29, 2022. In comparing fiscal 2022 to fiscal 2021, SG&A benefited from $0.5 million of non-recurring and other one-time expenses. Excluding the non-recurring and other one-time costs from both periods, SG&A as a percentage of total net sales was 55.6% compared to 57.3% for the year ended January 29, 2022.
- Operating income was $78.7 million compared to $58.7 million for the year ended January 29, 2022. Operating income margin for the year ended January 28, 2023 was 12.8% compared to 10.0% for the year ended January 29, 2022. Adjusted Income from Operations*, which excludes non-recurring items, adjustments for costs to exit retail stores and impairment charges, was $79.9 million compared to Adjusted Income from Operations* of $59.0 million for the year ended January 29, 2022. For the year ended January 28, 2023, the Company incurred $1.4 million of impairment charges related to right-of-use assets and leasehold improvements.
- Interest expense was $20.1 million compared to $19.1 million for the year ended January 29, 2022.
- During the year ended January 28, 2023, the Company recorded an income tax provision of $16.5 million compared to $8.0 million in the year ended January 29, 2022, and the effective tax rate was 28.1% compared to (39.8)% in the year ended January 29, 2022.
- Net Income was $42.2 million compared to a Net Loss of $28.1 million for the year ended January 29, 2022 which included $59.8 million non-cash charges related to the fair value adjustment of the warrants and the Priming Loan embedded derivative.
- Net Income per Diluted Share was $2.95 compared to a Net Loss of $2.26 for the year ended January 29, 2022 including the impact of non-recurring items. Excluding the impact of these items, Adjusted Net Income per Diluted Share* for the year ended January 28, 2023 was $3.01 compared to $2.13 for the year ended January 29, 2022.
- Adjusted EBITDA* for the year ended January 28, 2023 was $109.4 million compared to $91.8 million for the year ended January 29, 2022.
- The Company closed 11 stores and opened 1 new store in fiscal 2022, ending the year with 243 stores.
Balance Sheet Highlights
- Cash flow from operations for the year ended January 28, 2023 was $74.4 million compared to $75.0 million for the year ended January 29, 2022. The Company ended the fourth quarter of fiscal 2022 with a cash balance of $87.1 million.
- Inventory at the end of the fourth quarter of fiscal 2022 was $50.6 million compared to $56.0 million at the end of the fourth quarter of fiscal 2021.
- The company continues to explore options to refinance its existing term loans.
*Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “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” for more information.
Outlook
For fiscal 2023, the Company expects Annual Adjusted EBITDA dollars to be approximately flat, total capital expenditures between $18.0 and $20.0 million and a flat store count to end fiscal 2023.
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 be in the range of $25.0 million and $30.0 million.
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 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.
