Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~December 1, 2021,~~August 30, 2022, the registrant had ~~9,988,031~~10,148,504 shares of common stock, $0.01 par value per share, outstanding.

The accompanying notes are an integral part of these condensed consolidated financial statements.

1. Description of Business

J.Jill, Inc., “J.Jill” or the “Company”, is a premier omnichannel retailer and nationally recognized women’s apparel brand committed to delighting customers with great wear-now product. The brand represents an easy, thoughtful and inspired style that reflects the confidence of remarkable women who live life with joy, passion and purpose. J.Jill offers a guiding customer experience through ~~260~~247 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston.

2. Summary of Significant Accounting Policies

Basis of Presentation

Our interim condensed consolidated financial statements are unaudited. All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted, in accordance with the rules of the Securities and Exchange Commission (the “SEC”) associated with reporting of interim period financial information. We consistently applied the accounting policies described in our Annual Report on Form 10-K (the ~~“2020~~“2021 Annual Report”) for the fiscal year ended January ~~30, 2021~~29, 2022 (“Fiscal Year ~~2020”~~2021”) in preparing these unaudited interim condensed consolidated financial statements. In the opinion of management, these interim condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the financial position and results of operations of the Company. The consolidated balance sheet as of January ~~30, 2021~~29, 2022 is derived from the audited consolidated balance sheet as of that date. The unaudited results of operations for the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~October~~July 30, ~~2021~~2022 are not necessarily indicative of future results or results to be expected for the full year ending January ~~29, 2022~~28, 2023 (“Fiscal Year ~~2021”~~2022”). You should read these statements in conjunction with our audited consolidated financial statements and related notes in our ~~2020~~2021 Annual Report.

Prior year shares and per share amounts on the condensed consolidated statements of operations and comprehensive income and condensed consolidated statements of shareholders’ equity have been restated to reflect the reverse stock split on November 9, 2020.

~~Going Concern~~

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Presentation of Financial Statements - Going Concern”, we are required to evaluate whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of issuance of the financial statements. As discussed in our 2020 Annual Report, during Fiscal Year 2020 our revenues, results of operations, cash flows and financing arrangements were materially adversely impacted by the COVID-19 pandemic, and, accordingly; we concluded at the time that our liquidity and capital may not be sufficient to finance our continued operations for at least the next 12 months. Although during the first two quarters of Fiscal Year 2021, economic conditions significantly improved, COVID-19 restrictions were reduced, and we continued to take substantial actions to improve our liquidity and financial performance, we maintained this conclusion due to remaining risks and uncertainties relating to the future impacts of COVID-19 (see our quarterly reports for the first and second quarters of Fiscal Year 2021). However, as discussed below we have now concluded that substantial doubt about the Company’s ability to continue as a going concern within one year after the date of issuance of the financial statements has been alleviated.

In response to the impacts of COVID-19, we immediately took actions to improve our liquidity, capital resources and financial flexibility by restructuring our debt effective September 30, 2020, with an extended maturity and revised covenants (see Note 10 to our consolidated financial statements included in our 2020 Annual Report). Since the debt restructuring, the Company has been in compliance with all debt covenants, made all scheduled principal repayments including a $25.0 million voluntary repayment on August 27, 2021, and effectively converted $78.2 million of debt to equity. Our primary sources of liquidity and capital resources are cash generated from operating activities and availability under our ABL Facility, which has a maturity of May 8, 2023. As of October 30, 2021, we had $17.5 million in cash and $35.6 million of total availability under our ABL Facility, we exceeded the $15.0 million liquidity covenant by $46.2 million, and our projections indicate continued compliance with the liquidity and other covenants. Additionally, we have filed our federal income tax return for Fiscal Year 2020 and expect to receive a refund in excess of $25.0 million, however, the timing and amount of such refund is not known with certainty at this time.

We also took significant actions to reduce expenses and maximize cash on hand. We closed certain stores and successfully renegotiated terms on the majority of the remaining store fleet. We reduced the volume of inventory purchases and the number and frequency of new product floorsets which resulted in overhead, marketing, and shipping and handling cost savings. We also reduced capital spend in the business to focus on critical maintenance and strategic technical investments. As a result of these actions and improved economic conditions, the Company’s operating results, cash flows and liquidity continue to improve.

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Therefore, considering the improved general economic conditions, and our improved operating results, cash flows, liquidity (including Cash, Debt and Equity), and projections into the foreseeable future, we have concluded that substantial doubt about the Company’s ability to continue as a going concern within one year after the date of issuance of the financial statements has been alleviated. In accordance with FASB standards, this conclusion will be re-evaluated each quarter. If COVID-19 impacts should worsen and cause us to materially miss our projections, the Company would take additional actions to maintain its liquidity position and preserve cash flow, including but not limited to further cost reductions, payment term renegotiations, and flexing sales to the Direct channel if needed to compensate any impact on stores.

Cost of Goods Sold

Cost of goods sold (“COGS”) consist of all costs of sold merchandise (net of purchase discounts and vendor allowances). These costs include:

•

Direct costs of purchased merchandise;

•

Adjustments to the carrying value of inventory related to realizability and shrinkage; and

•

Inbound freight to our distribution center.

•

~~Direct costs of purchased merchandise;~~

•

~~Adjustments to the carrying value of inventory related to realizability and shrinkage; and~~

•

~~Inbound freight to our distribution center.~~

Our COGS and Gross margin may not be comparable to other entities. Some entities, like us, exclude costs related to shipping products to their customers, as well as costs of their distribution network, buying function, store occupancy costs and depreciation and amortization expenses from COGS and include them in Selling, general and administrative expenses, whereas other entities include these costs in their COGS.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of:

•

Payroll and payroll-related expenses;

•

Store occupancy expenses related to stores, distribution center and our headquarters location, including utilities;

•

Depreciation of property and equipment and amortization of intangibles;

•

Advertising expenses: print, digital and social media advertising and catalog production and distribution;

•

Information technology and communication costs;

•

Freight associated with shipping products to customers;

•

Insurance costs; and

•

Consulting and professional fees.

•

~~Payroll and payroll-related expenses;~~

•

~~Store Occupancy expenses related to stores, distribution center and our headquarters location, including utilities;~~

•

~~Depreciation of property and equipment and amortization of intangibles;~~

•

~~Advertising expenses: print, digital and social media advertising and catalog production and distribution;~~

•

~~Information technology and communication costs;~~

•

~~Freight associated with shipping products to customers;~~

•

~~Insurance costs; and~~

•

~~Consulting and professional fees.~~

Out-of-Period Item

During the second quarter of Fiscal Year 2021, the Company recorded an adjustment to correct prior period overstatements of inventory and understatements of COGS totaling ~~$1.5~~$1.5 million ($1.1 million after taxes). The errors were primarily caused by an

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overstatement of inventory transferred from certain locations. Management evaluated the impacts of the out-of-period adjustment to correct the errors for the ~~thirty-nine~~thirteen and twenty-six weeks ended ~~October 30,~~July 31, 2021 and for prior periods, both individually and in the aggregate, and concluded that the adjustment was not material to the Company’s consolidated annual or interim financial statements for all impacted periods. ~~The adjustment had 0 impact on~~No such adjustments were recorded for the ~~thirteen~~twenty-six weeks ended ~~October~~July 30, ~~2021.~~2022.

Recently ~~Issued~~Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes”. ~~The pronouncement is effective for a public company’s annual reporting periods beginning after December 15, 2020,~~This ASU eliminates certain exceptions to the general approach in ASC Topic 740 and ~~interim periods within those annual periods. As an emerging growth company,~~includes methods of simplification to the existing guidance. This standard was adopted by the Company ~~has elected to adopt~~in the pronouncement following the effective date for private companies beginning with annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15,first quarter of Fiscal Year 2022. The ~~Company is currently evaluating the impact that~~adoption of this standard ~~will have~~had no material impact on the ~~condensed~~Company’s consolidated financial statements. ~~The Company plans to adopt the pronouncement during the fiscal year ending January 28, 2023.~~

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU ~~No.~~ 2020-04, “Reference Rate Reform”, which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”). The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified. The guidance is currently effective and may be applied

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prospectively at any point through December 31, 2022. The Company is assessing what impact this guidance will have on the Company’s condensed consolidated financial ~~statements~~statements.

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4. ~~Asset Impairments~~

~~Long-lived Asset Impairments~~

~~The Company did 0t record any impairments on long-lived assets during the thirty-nine weeks ended October 30, 2021.~~

In the first quarter of Fiscal Year 2020, the Company reduced the net carrying value of certain long-lived assets to their estimated fair value, which was determined using a discounted cash flows method. These impairment charges arose from the material adverse effect COVID-19 had on our results of operations, particularly with our store fleet. The Company incurred impairment charges of $6.7 million on leasehold improvements and $20.8 million on the right-of-use asset. During the second quarter of Fiscal Year 2020, the Company recorded a $1.3 million non-cash gain on the operating leases liabilities due to its decision to close certain retail stores. Approximately $0.9 million of the benefit related to leases that were included in the impairment on right-of-use assets recorded in the first quarter of Fiscal Year 2020; therefore, the benefit was recorded as a reduction of the previously recorded impairment. See Note 12 for additional information.

Goodwill and Other Intangible ~~Asset Impairments~~Assets

In the first quarter of Fiscal Year 2020, the Company temporarily closed its retail locations due to COVID-19, which had a material adverse effect on our results of operations, financial position and liquidity and led to a significant decline in our net sales for the first half of Fiscal Year 2020. The Company incurred impairment charges of $17.9 million on goodwill, $4.0 million on trade name and $2.6 million on customer relationships during the thirteen and thirty-nine weeks ended October 31, 2020. All stores were open during the thirty-nine weeks ended October 30, 2021 and the Company did not record any impairments on goodwill or other intangible assets for this period.

The Company performed the impairment tests in the first quarter of Fiscal Year 2020 using the income approach (or discounted cash flows method) for goodwill, the relief-from-royalty method for indefinite-lived intangible assets and a recoverability analysis for definite-lived intangible assets. Key assumptions included future revenue growth and profitability trends over a period of 5-10 years with a terminal value, a discount rate based on an estimated weighted average cost of capital within a range of 23.5% to 34.0% and royalty rates within a range of 1% to 4%. These assumptions are classified as Level 3 inputs.

~~The following table displays a rollforward of the carrying amount~~balance of goodwill ~~from February 1, 2020 to October~~was $59.7 million at July 30, ~~2021 (in thousands):~~

Goodwill at February 1, 2020

$
77,597

Impairment losses (first quarter)

(17,900
)
Balance, January 30, 2021

59,697

Impairment losses

0

Balance, October 30, 2021

$
59,697

2022 and January 29, 2022. The accumulated goodwill impairment losses as of ~~October~~July 30, ~~2021~~2022 are ~~$137.3~~$137.3 million.

A summary of other intangible assets as of ~~October~~July 30, ~~2021~~2022 and January ~~30, 2021~~29, 2022 is as follows (in thousands):


		October 30, 2021									July 30, 2022
	Weighted Average Useful Life (Years)	Gross		Accumulated Amortization		Accumulated Impairment		Carrying Amount		Weighted Average Useful Life (Years)	Gross		Accumulated Amortization		Accumulated Impairment		Carrying Amount
Indefinite-lived:
Trade name	N/A	$	58,100	$	—	$	24,100	$	34,000	N/A	$	58,100	$	—	$	24,100	$	34,000
Definite-lived:
Customer relationships	13.2		134,200		82,803		2,620		48,777	13.2		134,200		88,631		2,620		42,949
Total intangible assets		$	192,300	$	82,803	$	26,720	$	82,777		$	192,300	$	88,631	$	26,720	$	76,949


		January 29, 2022
	Weighted Average Useful Life (Years)	Gross		Accumulated Amortization		Accumulated Impairment		Carrying Amount
Indefinite-lived:
Trade name	N/A	$	58,100	$	—	$	24,100	$	34,000
Definite-lived:
Customer relationships	13.2		134,200		84,869		2,620		46,711
Total intangible assets		$	192,300	$	84,869	$	26,720	$	80,711

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January 30, 2021

Weighted Average Useful Life (Years)

Gross

Accumulated Amortization

Accumulated Impairment

Carrying Amount

Indefinite-lived:

Trade name

N/A

$
58,100

$
—

$
24,100

$
34,000

Definite-lived:

Customer relationships

13.2

134,200

76,604

2,620

54,976

Total intangible assets

$
192,300

$
76,604

$
26,720

$
88,976

Total amortization expense for these amortizable intangible assets was ~~$2.1~~$1.9 million and ~~$2.3~~$2.0 million for the thirteen weeks ended ~~October~~July 30, ~~2021~~2022 and ~~October~~July 31, ~~2020,~~2021, respectively, and ~~$6.2~~$3.8 million and ~~$7.0~~$4.1 million for the ~~thirty-nine~~twenty-six weeks ended ~~October~~July 30, 2022 and July 31, 2021, ~~and October 31, 2020,~~ respectively.

The estimated amortization expense for each of the next five years and thereafter is as follows (in thousands):


Fiscal Year	Estimated Amortization Expense
2022	$	3,761
2023		6,942
2024		5,231
2025		4,693
2026		4,556
Thereafter		17,766
Total	$	42,949

Fiscal Year

Estimated Amortization Expense

2021

$
1,377

2022

7,585

2023

6,990

2024

5,407

2025

4,705

Thereafter

22,713

Total

$
48,777

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Impairment Tests

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment at least annually at fiscal year-end, or more frequently when events or changes in circumstances indicate that the carrying value may not be recoverable. Definite-lived intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable. Judgments regarding indicators of potential impairment are based on market conditions and operational performance of the business.

For goodwill and other intangible assets, the Company performed the required review for potential impairments and no impairments were indicated.

5. Debt

The components of the Company’s outstanding long-term debt at July 30, 2022 and January 29, 2022 were as follows (in thousands):


	At July 30, 2022
	Outstanding Balance			Original Issue Discount			Capitalized Fees & Expenses			Balance Sheet
Priming Term Loan due 2024	$	202,033		$	(1,073	)	$	(2,212	)	$	198,748
Subordinated Term Loan due 2024		19,040			—			(11,704	)		7,336
Totals		221,073			(1,073	)		(13,916	)		206,084
Less: Current portion		(2,739	)		—			—			(2,739	)
Net long-term debt	$	218,334		$	(1,073	)	$	(13,916	)	$	203,345


	At January 29, 2022
	Outstanding Balance			Original Issue Discount			Capitalized Fees & Expenses			Balance Sheet
Existing Term Loan due 2022	$	4,963		$	(10	)	$	—		$	4,953
Priming Term Loan due 2024		203,403			(1,356	)		(2,797	)		199,250
Subordinated Term Loan due 2024		17,829			—			(12,224	)		5,605
Totals		226,195			(1,366	)		(15,021	)		209,808
Less: Current portion		(7,692	)		—			—			(7,692	)
Net long-term debt	$	218,503		$	(1,366	)	$	(15,021	)	$	202,116

Carrying Value of Debt

October 30, 2021

January 30, 2021

Term Loan (principal of $4,963 and $5,007, respectively)

$
4,944

$
4,904

Priming Loan (principal of $203,403 and $229,773, respectively)

198,826

223,296

Subordinated Facility (principal and paid-in kind interest of $17,077 and $15,666, respectively)

4,908

3,311

Less: Current portion

(6,999
)

(2,799
)
Net long-term debt

$
201,679

$
228,712

Existing Term Loan

The Company iswas party to a term loan credit agreement, dated ~~as of~~ May 8, 2015, ~~by and among Jill Holdings, Inc. (as successor to Jill Holdings LLC), Jill Acquisition LLC, a wholly owned subsidiary of us, and the various lenders party thereto,~~ as amended, until it was re-paid on May ~~27, 2016 by Amendment No. 1 thereto, as further amended by Amendment No. 2 thereto (the “Term Loan”)~~8, 2022.

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Priming Term Loan

The Company is party to a senior secured priming term loan facility, dated ~~August 31,~~September 30, 2020 (the “Priming Loan” and, the lenders thereunder, the “Priming Lenders”)..The maturity date of the Priming Credit Agreement is May 8, 2024, and the loans under the Priming Credit Agreement bear interest at the Company’s election at: (1) Base Rate (as defined in the Priming Credit Agreement) plus 4.00% or (2) LIBOR plus 5.00%, with a minimum LIBOR per annum of 1.00%, with the interest payable on a quarterly basis. The Priming Credit Agreement offered the option to make a principal paydown of at least $25.0 million by August 30, 2021; otherwise, there would be a paid-in-kind (“PIK”) interest rate increase and a PIK fee. On August ~~30,~~27, 2021, the Company made ~~a scheduled~~the principal paydown of ~~$25.0 million.~~$25.0 million to avoid additional PIK and interest fees.

In accordance with the Priming ~~Term Loan~~ Credit Agreement, dated as of September 30, 2020 by and among the Company and Priming Lenders (the “Priming Credit Agreement”), the Company issued to the Priming Lenders 656,717 shares, as adjusted for the Company’s 1-for-5 stock split that occurred during the fourth quarter of Fiscal Year 2020, of the Company’s Common Stock (the “Equity Consideration”). Onon May 31, 2021, the Company had the choice (the “May 31, 2021 Option”) to either (i) repay ~~$4.9 million in aggregate~~a stated principal amount of the loans under the Priming Credit Agreement, together with accrued and unpaid interest thereon or (ii) issue additional shares of ~~Common Stock~~common stock to the Priming Lenders in an amount ~~equal to~~as defined in the ~~greater of (I) 9.79%~~Priming Credit Agreement. On May 31, 2021, and within the terms of the ~~fully diluted~~Priming Loan, the Company chose to issue 272,097 additional shares of ~~Common Stock as of October 1, 2020 less 656,717 shares and (II) a number of shares of Common Stock with an aggregate~~

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~~value of $0.5 million at the time of such issuance; provided, that~~common stock to the Priming Lenders ~~shall not receive on such date shares of Common Stock having~~with a value ~~greater than $4.75~~of approximately $5.2 million (based on the ~~volume-weighted average stock price~~value of ~~the preceding five trading days) at the time~~those shares as of ~~such issuance.~~close on that date). The May 31, 2021 Option was considered an embedded derivative within the Priming Loan that was required to be adjusted to fair value each period while it was outstanding, with the adjustment being recorded in income. OnThrough May 31, 2021, the fair value adjustments resulted in charges of $0.6 million and $2.8 million for the thirteen and twenty-six weeks ended July 31, 2021, respectively, being recorded within Fair value adjustment of derivative in the ~~terms~~condensed consolidated statements of the Priming Loan, the Company chose to issue 272,097 additional shares of Common Stock to the Priming Lenders with a value of approximately $5.2 million (based on the value of those shares as of close on that date)operations and comprehensive income (loss).

The Company’s obligations under the Priming Credit Agreement are secured by substantially all of the real and personal property of the Company and certain of its subsidiaries, subject to certain customary exceptions. The Priming Credit Agreement includes customary negative covenants, including covenants limiting the ability of the Company to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and purchases, pay dividends and distributions, enter into transactions with affiliates, and make payments in respect of junior indebtedness. The Priming Credit Agreement also has certain financial covenants, including (1) a minimum liquidity covenant that generally requires minimum liquidity on a weekly basis of ~~$15.0~~$15.0 million, (2) a first lien net leverage ratio that requires compliance beginning in the fourth quarter of Fiscal Year 2021 with a net leverage ratio of 5:5:1, which reduces over time, and (3) limits on capital expenditures of ~~$20.0~~$20.0 million annually. As of ~~October~~July 30, ~~2021,~~2022 and January 29, 2022, the Company was in compliance with all covenants.

Subordinated ~~Facility~~Term Loan

On September 30, 2020, ~~in accordance with the TSA,~~ the Company entered into a subordinated facility, with the Subordinated Lenders (as defined below), that provides for a secured term loan facility in an aggregate principal amount equal to ~~$15.0~~$15.0 million with an additional incremental capacity subject to certain customary conditions (the “Subordinated Facility”).

The Subordinated Lenders are a group of related parties that includes certain affiliates of TowerBrook and our Chairman of the board of directors.

InThe maturity date of the Subordinated Facility is November 8, 2024. Loans under the Subordinated Facility bear interest at the Borrower’s election at (1) Base Rate (as defined in the Subordinated Facility) plus 11.00% or (2) LIBOR plus 12.00%, with a minimum LIBOR per annum of 1.00%. The Subordinated Facility is secured by substantially all of the real and personal property of the Company. The Subordinated Facility includes customary negative covenants for subordinated term loan agreements of this type, including covenants limiting the ability of the Company to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and purchases, pay dividends and distributions, enter into transactions with affiliates, and make payments in respect of junior indebtedness. The Subordinated Facility also has certain financial covenants, including (1) a minimum liquidity covenant that generally requires minimum liquidity on a weekly basis of $12.75 million, (2) a first lien net leverage ratio that requires compliance beginning in the fourth quarter of Fiscal Year 2021 with a net leverage ratio of 5.75:1, which reduces over time, and (3) limits on capital spending of $23.0 million annually. The difference between the carrying value of the subordinated facility debt and the principal amount was accreted over the term of the debt using the effective interest method.

On May 31, 2021, in accordance with the Subordinated Facility, the Company issued ~~penny~~ warrants to the Subordinated ~~Lenders.~~ Lenders. See Note 8, Net Income (Loss) Per Share for additional information regarding the warrants.

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Asset-Based Revolving Credit Agreement

The Company is party to a secured ~~$40.0~~$40.0 million asset-based revolving credit facility agreement (the “ABL Facility”) ~~with a~~.

On April 15, 2022, the Company entered into an Amendment No. 5 to its ABL Credit Agreement (the “ABL Amendment”), by and among the Company, Jill Acquisition LLC, J.Jill Gift Card Solutions, Inc., Jill Intermediate LLC, the other guarantors party thereto from time to time, the other lenders party thereto from time to time and CIT Finance LLC, as the administrative agent and collateral agent. The ABL Amendment (i) extended the maturity date of the ABL Facility from May 8, ~~2023.~~

~~During~~2023 to May 8, 2024, provided that if by November 4, 2023, the ~~second quarter of Fiscal Year 2021,~~Priming Loan maturity date has not been appropriately extended to a date that is at least November 4, 2024, then the ~~Company paid down~~ABL Facility maturity date shall automatically be deemed to be November 4, 2023, and (ii) changed the ~~outstanding short-term borrowings~~benchmark interest rate applicable to the loans under the ABL ~~Facility.~~ Facility from LIBOR to the forward-looking secured overnight financing rate.

The Company had noshort-term borrowings ~~of $11.1 million~~ under the Company’s ABL Facility as of July 30, 2022 and January ~~30, 2021.~~29, 2022. The Company’s available borrowing capacity under the ABL Facility as of ~~October~~July 30, ~~2021~~2022 and January ~~30, 2021~~29, 2022 was ~~$35.6~~$34.9 million and ~~$23.8~~$22.6 million, respectively. ~~As of October~~At July 30, ~~2021~~2022 and January ~~30, 2021,~~29, 2022, there were outstanding letters of credit of ~~$4.4~~$4.5 million, ~~and $2.9 million, respectively,~~ which reduced the availability under the ABL Facility. As of ~~October~~July 30, ~~2021,~~2022, the maximum commitment for letters of credit was ~~$10.0~~$10.0 million.

6. Fair Value Measurements

~~Certain assets and liabilities are carried at fair value in accordance with GAAP.~~ Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value require the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•

Level 1 - Quoted prices in active markets for identical assets or liabilities.

•

Level 2 - Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar assets or liabilities in markets that are not active; or other inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities, including interest rates and yield curves, and market corroborated inputs.

•

Level 3 - Unobservable inputs for the assets or liabilities that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These are valued based on management’s estimates and assumptions that market participants would use in pricing the asset or liabilities.

•

~~Level 1 - Quoted prices in active markets for identical assets or liabilities.~~

•

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•

The following table presents the carrying value and fair value hierarchy for debt as of ~~October~~July 30, ~~2021~~2022 and January 29, 2022, respectively (in thousands):

Fair Value

Carrying Value

Level 1

Level 2

Level 3

Financial instruments not carried at fair value:

Total debt

$
208,678

$
—

$
210,177

$
—

Total financial instruments not carried at fair value

$
208,678

$
—

$
210,177

$
—

The following table presents the carrying value and fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of January 30, 2021 and for debt which is not carried at fair value (in thousands). Effective May 31, 2021, the warrants and derivative liabilities were transferred to equity and are no longer measured at fair value on a recurring basis (see Note 8 for additional information):

Fair Value

Carrying Value

Level 1

Level 2

Level 3

Recurring fair value measurements:

     Warrants

$
15,997

$
—

$
15,997

$
—

     Derivative liability

2,436

—

2,436

—

Total recurring fair value measurements

$
18,433

$
—

$
18,433

$
—

Financial instruments not carried at fair value:

     Total debt

$
231,511

$
—

$
220,010

$
—

Total financial instruments not carried at fair value

$
231,511

$
—

$
220,010

$
—


			Fair Value as of July 30, 2022
	Carrying Value		Level 1		Level 2		Level 3
Financial instruments not carried at fair value:
Total debt	$	206,084	$	—	$	206,803	$	—
Total financial instruments not carried at fair value	$	206,084	$	—	$	206,803	$	—


			Fair Value as of January 29, 2022
	Carrying Value		Level 1		Level 2		Level 3
Financial instruments not carried at fair value:
Total debt	$	209,808	$	—	$	203,485	$	—
Total financial instruments not carried at fair value	$	209,808	$	—	$	203,485	$	—

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The ~~Company determines~~Company’s debt instruments include the Priming Loan, Subordinated Facility, as well as the Term Loan until re-paid on May 8, 2022. The debt instruments are recorded at cost, net of debt issuance costs and any related discount. The fair value of ~~its financial assets and liabilities using~~ the ~~following methodologies:~~debt instruments is obtained based on observable market prices quoted on public exchanges for similar instruments.

•

~~Warrants - The fair value is determined based on a pricing model that uses share prices from actively quoted stock markets that are readily accessible and observable.~~

•

Derivative Liability - The fair value is determined using an option pricing model with a Monte Carlo simulation. Key assumptions include the Company’s stock price, 90.6% volatility, 0.01% risk-free rate and 0.0% dividend yield.

•

Debt - These debt instruments include the Term Loan, Priming Loan and Subordinated Facility. The debt instruments are recorded at cost, net of debt issuance costs and any related discount. The fair value of the debt instruments is obtained based on observable market prices quoted on public exchanges for similar instruments.

The methodology used by the Company to determine the fair value of its financial ~~assets and liabilities~~instruments at ~~October~~July 30, ~~2021,~~2022, is the same as that used at January ~~30, 2021.~~29, 2022.

The Company believes that the carrying amounts of its other financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and any amounts drawn on its revolving credit facilities, consisting primarily of instruments without extended maturities, based on management’s estimates, approximates their fair value due to the short-term maturities of these instruments.

Assets and Liabilities with Recurring Fair Value Measurements - Certain assets and liabilities may be measured at fair value on an ongoing basis. We did not elect to apply the fair value option for recording financial assets and financial liabilities. Other than ~~the warrants, derivative liability and~~ total debt, we do not have any assets or liabilities which we measure at fair value on a recurring basis.

Assets and Liabilities with Nonrecurring Fair Value Measurements - Certain assets and liabilities are not measured at fair value on an ongoing basis. These assets and liabilities, which include long-lived assets, goodwill, ~~and~~ intangible assets, and debt are subject to fair value adjustment in certain circumstances. From time to time, the fair value is determined on these assets and liabilities as part of related impairment ~~tests. Other than impairment accounting adjustments, no adjustments to fair value~~tests or ~~fair value measurements were required~~ for ~~non-financial assets and liabilities for all periods presented.~~disclosure purposes. See Note 4, Goodwill and Other Intangible Assets ~~Impairments~~, for additional information.

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7. Income Taxes

The Company recorded an income tax provision of ~~$2.6~~$5.9 million ~~for the thirteen weeks ended October 30, 2021~~ and ~~an income tax benefit of $7.3~~$4.4 million during the thirteen weeks ended ~~October~~July 30, 2022 and July 31, ~~2020.~~2021, respectively. The Company recorded an income tax provision of ~~$8.4~~$10.9 million and $5.8 million for the ~~thirty-nine~~twenty-six weeks ended ~~October~~July 30, 2022 and July 31, 2021, ~~and an income tax benefit of $38.5 million for the thirty-nine weeks ended October 31, 2020.~~respectively.

The effective tax rate for the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~October~~July 30, 2022 differs from the federal statutory rate of 21% primarily due to the impact of federal, state and local income taxes and partial release of its valuation allowance on state deferred tax assets. The effective tax rate for the thirteen and twenty-six weeks ended July 31, 2021 differs from the federal statutory rate of ~~21%~~21% primarily due to the nondeductible fair value adjustment of the warrants and the Priming Loan embedded derivative, the impact of executive compensation limitations and the impact of state and local income taxes. ~~The effective tax rate for the thirteen and thirty-nine weeks ended October 31, 2020 differs from the federal statutory rate~~

Table of 21% primarily due to the impact on the effective tax rate from goodwill impairment, which has no associated tax benefit, which was partially offset by a benefit from the CARES Act as well as the impact of state income taxes.Contents

8. Net Income (Loss) Per Share

The following table summarizes the computation of basic and diluted net income (loss) per common share (“EPS”) (in thousands, except share and per share data):


	For the Thirteen Weeks Ended					For the Thirty-Nine Weeks Ended						For the Thirteen Weeks Ended					For the Twenty-Six Weeks Ended
	October 30, 2021		October 31, 2020			October 30, 2021			October 31, 2020			July 30, 2022		July 31, 2021			July 30, 2022		July 31, 2021
Numerator
Net income (loss) attributable to common shareholders	$	11,238	$	(23,159	)	$	(31,718	)	$	(112,462	)	$	17,805	$	(24,648	)	$	32,220	$	(42,956	)
Denominator
Weighted average number of common shares outstanding		9,987,435		9,177,350			9,849,700			9,004,321			10,120,226		9,895,314			10,093,098		9,780,833
Assumed exercise of warrants		3,810,695		—			2,121,705			—			3,810,140		2,555,037			3,809,359		1,277,518
Weighted average common shares, basic		13,798,130		9,177,350			11,971,405			9,004,321			13,930,366		12,450,351			13,902,457		11,058,351
Dilutive effect of stock options and restricted shares		376,088		—			—			—			322,063		—			309,311		—
Weighted average common shares, diluted		14,174,218		9,177,350			11,971,405			9,004,321			14,252,429		12,450,351			14,211,768		11,058,351
Net income (loss) per common share, basic	$	0.81	$	(2.52	)	$	(2.65	)	$	(12.49	)	$	1.28	$	(1.98	)	$	2.32	$	(3.88	)
Net income (loss) per common share, diluted	$	0.79	$	(2.52	)	$	(2.65	)	$	(12.49	)	$	1.25	$	(1.98	)	$	2.27	$	(3.88	)

Equity compensation awards are excluded from the diluted earnings per share calculation when their inclusion would have an antidilutive effect such as when the Company has a net loss for the reporting period, or if the assumed proceeds per share of the award is in excess of the related fiscal period’s average price of the Company’s common stock. Accordingly, ~~210,204~~136,096 and ~~702,278~~148,839 shares for the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~October~~July 30, 2022 and 77,403 and 104,108 shares for the thirteen and twenty-six weeks ended July 31, 2021, respectively, were excluded from the diluted earnings per share calculation because their inclusion would be antidilutive. ~~Also, there were 416,363 and 476,541 shares for the thirteen and thirty-nine weeks ended October 30, 2020, respectively, that were excluded from the diluted calculation.~~

Warrants

~~Warrants~~

OnAs described in Note 5, Debt, on May 31, 2021 ~~and within the terms of the Priming Loan,~~ the Company chose to issue 272,097 additional shares of ~~Common Stock~~common stock to the Priming ~~Lenders with a value of approximately $5.2 million based upon the preceding 5-day volume weighted average share price rather than repay $4.9 million of principal.~~Lenders. As a result of this choice, ~~and because~~the warrants related to the holders of the ~~antidilution provision under the warrant agreement, the penny warrants~~Subordinated Term Loan became exercisable into 3,820,748 shares of common stock for an aggregate exercise price of ~~$186,000. Through May 31, 2021,~~$186,000. Also, the ~~Company recognized approximately $39.0~~warrants liability totaling $73.0 million and $59.8 million of non-cash charges recorded within Fair value adjustments – derivative and Fair value adjustments – warrants, respectively, in the condensed consolidated statements of operations and comprehensive income during the thirteen and twenty-six weeks ended July 31, 2021, respectively. Effective May 31, 2021, the remaining derivative and warrants liabilities totaling $78.2 million werewas reclassed to Additional paid-in capital because from that date they can only be settled by exercise of the warrants into common stock (i.e., cash is no longer a settlement option). Through May 31, 2021, due to increases in the Company’s common stock price, the Company recognized $39.0 million and $59.8 million of non-cash fair value adjustment charges in the condensed consolidated statements of operations and comprehensive income during the thirteen and twenty-six weeks ended July 31, 2021, respectively.

~~Effective~~Also, effective May 31, 2021 the warrants ~~issued to the Subordinated Facility holders~~ have been included in the denominator for both basic and diluted EPS calculations as the exercise of the warrants is near certain because the exercise price is non substantive in relation to the fair value of the common shares to be issued upon exercise.

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9. Equity-Based Compensation

Equity-based compensation expense was ~~$0.8~~$1.0 million and ~~$1.9~~$1.7 million for the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~October~~July 30, ~~2021,~~2022, respectively, and ~~$0.3~~$0.7 million and ~~$1.6~~$1.1 million for the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~October~~July 31, ~~2020, respectively,~~2021, respectively.

10. Related Party Transactions

On September 30, 2020, the Company entered into the Subordinated Facility, with a group of lenders that includes certain affiliates of TowerBrook and our Chairman of the board of directors. In accordance with the Subordinated Facility, the Company issued ~~penny~~ warrants to the Subordinated Lenders. In accordance with the Subordinated Facility, the Company issued warrants to the Subordinated Lenders (See Note 5, Debt, and Note 8, Net Income (Loss) Per Share).

For the thirteen and twenty-six weeks ended ~~October~~July 30, ~~2021~~2022 the Company incurred ~~$0.6~~$0.9 million and $1.7 million, respectively, of Interest expense, net – related party associated with the Subordinated Facility in the condensed consolidated statements of operations and comprehensive income. For the ~~thirty-nine~~thirteen and twenty-six weeks ended ~~October 30,~~July 31, 2021, the Company incurred ~~$1.6~~$38.3 million and ~~$57.0~~$57.0 million, respectively, of Fair value adjustment of warrants – related party, and $0.5 million and $1.0 million, respectively, of Interest expense, net – related ~~party and Fair value adjustment of warrants – related party associated with the Subordinated Facility in the condensed consolidated statements of operations and comprehensive income.~~ party.

For the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~October~~July 30, 2022 and July 31, ~~2020,~~2021, the Company incurred an immaterial amount of other related party transactions.

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11. Commitments and Contingencies

Legal Proceedings

The Company is subject to various legal proceedings that arise in the ordinary course of business. Although the outcome of such proceedings cannot be predicted with certainty, management does not believe that the Company is presently party to any legal proceedings the resolution of which management believes would have a material adverse effect on the Company’s ~~business,~~ financial ~~condition, operating results or cash flows.~~statements. The Company establishes reserves for specific legal matters when the Company determines that the likelihood of an unfavorable outcome is probable, and the loss is reasonably estimable.

~~12. Operating Leases~~

During the thirty-nine weeks ended October 30, 2021, the Company recorded non-cash gains of $0.8 million associated with exiting store leases earlier than expected and non-cash gains of $0.4 million related to favorable lease renegotiations. During the thirteen weeks ended October 30, 2021, the Company recorded non-cash gains of $0.4 million associated with favorable lease negotiations and $0.1 million related to exiting store leases earlier than expected.

During the first quarter of Fiscal Year 2020, the Company reduced the net carrying value of right-of-use assets to their estimated fair value, which was determined using a discounted cash flows method. These impairment charges arose from the material adverse effect that COVID-19 had on our results of operations, particularly with our store fleet. The Company recognized non-cash impairment charges of $6.7 million on leasehold improvements and non-cash impairment charges associated with right-of-use assets of $20.8 million during the first quarter of Fiscal Year 2020. During the second quarter of Fiscal Year 2020, the Company recorded a $1.3 million non-cash gain on the operating lease liability due to its decision to close certain retail stores. Approximately $0.9 million of the benefit related to leases that were included in the impairment on right-of-use assets recorded in the first quarter of Fiscal Year 2020; therefore, the benefit was recorded as a reduction of the previously recorded impairment. Approximately $0.4 million of the benefit related to the adjustment to the right-of-use asset and operating lease liability of leases not previously impaired and was recorded in Selling, General and Administrative expenses.

~~The Company did not incur any impairment charges on its right-of-use assets during the thirty-nine weeks ended October 30, 2021.~~

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The followingdiscussionand analysisshouldbe read in conjunctionwith our condensed consolidatedfinancial statementsand relatednotestheretoincludedelsewherein thisquarterly reporton Form 10-Q (the “Quarterly Report”). The followingdiscussioncontainsforward-looking statementsthatreflectour plans,estimatesand assumptions.Our actualresultscoulddiffermateriallyfrom thosediscussedin theforward-lookingstatements.Factorsthatcouldcausesuch differencesare discussedin the sectionsof thisQuarterly Report titled~~“Risk~~ “Risk Factors” and “Special Note Regarding Forward-Looking ~~Statements”.~~Statements.”

Weoperateon a 52- or 53-weekfiscalyearthatends on theSaturdaythatisclosestto January31. Each fiscalyeargenerallyiscomprisedof four13-weekfiscalquarters,althoughin theyearswith 53 weeks, thefourth quarterrepresentsa 14-weekperiod. The ~~Fiscal~~fiscal year ended January 28, 2023 ( “Fiscal Year ~~2021~~2022”) and fiscal year ended January 30~~, 2021~~29, 2022 (“Fiscal Year ~~2020”~~2021”) are both comprisedof 52 weeks.

Overview

J.Jill is a premier omnichannel retailer and nationally recognized women’s apparel brand committed to delighting customers with great wear-now product. The brand represents an easy, thoughtful and inspired style that reflects the confidence of remarkable women who live life with joy, passion and purpose. J.Jill offers a guiding customer experience through ~~260~~247 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston.

~~The COVID-19 pandemic began~~Factors Affecting Our Operating Results

Various factors are expected to continue to affect our ~~business in~~results of operations going forward, including the first quarter of Fiscal Year 2020. Our stores were temporarily closed beginning in mid-March 2020 and through portions of the second quarter of Fiscal Year 2020. Changes in customer behavior as a result of the pandmic toward in-store shopping had a material adverse effect on our operations, cash flows and liquidity. In response to the impacts of COVID-19, we immediately took actions to improve our liquidity and financial flexibility by restructuring our debt with an extended maturity (see Note 10 to the consolidated financial statements included in our 2020 Annual Report). We also took actions to reduce expenses, to maximize cash on hand, and we continue to closely manage working capital (primarily inventory levels) and capital expenditures. following:

During Fiscal Year 2021, we have achieved significant improvements in sales growth and gross margin expansion due to the general improvements in the economy and our focus on driving full price sales as customer traffic trends improved.

•

~~Net sales for the current quarter increased by 29.4% versus the third quarter of Fiscal Year 2020 (“YOY”),~~

•

~~Gross margins improved 10% to 68.9% YOY and gross profit increased 51.5% YOY,~~

•

~~SG&A expenses as a percentage of sales decreased by 22.2 percentage points to 56.4% from 78.6% YOY,~~

•

~~Operating cash flows increased to $25.6 million in the current quarter versus a negative $3.0 million in the prior year third quarter, and~~

•

~~At October 30, 2021 versus our fiscal year end January 30, 2021, Cash increased $13.0 million, Debt decreased by $34.0 million, and Shareholders’ deficit improved by $48.0 million.~~

As discussed in Note 2 to the condensed consolidated financial statements included in this Form 10-Q, we have now concluded that substantial doubt about the Company’s ability to continue as a going concern within one year after the date of issuance of the financial statements has been alleviated.

~~FactorsAffectingOur OperatingResults~~

~~Variousfactorsareexpectedto continueto affectour resultsof operationsgoing forward,includingthe following:~~

OverallEconomic Trends. Consumer purchases of clothing and other merchandise generally decline during recessionary periods and other periods when disposable income is adversely affected, and consequently our results of operations may be affected by general economic conditions. For example, reduced consumer confidence, lower availability, inflationary pressures and higher cost of consumer credit may reduce demand for our merchandise and may limit our ability to increase or sustain prices. The growth rate of the market could be affected by macroeconomic conditions in the United States. Additionally, the occurrence or reoccurrence of any significant pandemic could impact our sales and business operations.

Consumer Preferencesand Fashion Trends. Our ability to maintain our appeal to existing customers and attract new customers depends on our ability to anticipate fashion trends. During periods in which we have successfully anticipated fashion trends, we have generally had more favorable results.

~~Competitio~~nCompetition. The retail industry is highly competitive and retailers compete based on a variety of factors, including design, quality, price and customer service. Levels of competition and the ability of our competitors to more accurately predict fashion trends and otherwise attract customers through competitive pricing or other factors may impact our results of operations.

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Our Strategic Initiatives. The ongoing implementation of strategic initiatives will continue to have an impact on our results of operations. These initiatives include our ecommerce platform and our initiative to upgrade and enhance our information systems. Although initiatives of this nature are designed to create growth in our business and continuing improvement in our operating results, the timing of expenditures related to these initiatives, as well as the achievement of returns on our investments, may affect our results of operations in future periods.

Pricingand Changes in Our MerchandiseMix Mix or Supply Chain Issues. Our product offering changes from period to period, as do the prices at which goods are sold and the margins we are able to earn from the sales of those goods. The levels at which we are able to price our merchandise are influenced by a variety of factors, including the quality of our products, cost of production, prices at which our competitors are selling similar products, sourcing and/or distributing product, and the willingness of our customers to pay for products.

Potential Changes in Tax Laws and/or Regulations. Changes in tax laws in any of the multiple jurisdictions in which we operate, or adverse outcomes from tax audits that we may be subject to in any of the jurisdictions in which we operate, could adversely affect our business, financial condition and operating results. Additionally, any potential changes with respect to tax and trade policies, tariffs and government regulations affecting trade between the U.S. and other countries could adversely affect our business, as we source the majority of our merchandise from manufacturers located outside of the U.S.

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How We Assessthe Performanceof Our Business

In assessingtheperformanceof our business,we considera varietyof financialand operatingmetrics, includingGAAPand non-GAAP measures, including the following:~~measures,includingthefollowing:~~

Net sales ~~consist~~consists primarily of revenues, net of merchandise returns and discounts, generated from the sale of apparel and accessory merchandise through our ~~Retail channel~~retail stores (“Retail”) and ~~Direct channel.~~through our website and catalog orders (“Direct”). Net sales also include shipping and handling fees collected from customers and royalty revenues and marketing reimbursements related to our private label credit card agreement. ~~Revenue from our~~ Retail ~~channel~~revenue is recognized at the time of sale and ~~revenue from our~~ Direct ~~channel~~revenue is recognized upon shipment of merchandise to the customer.

Net sales are impacted by the size of our active customer base, product assortment and availability, marketing and promotional activities and the spending habits of our customers. Net sales are also impacted by the migration of single-channel customers to omnichannel customers who, on average, spend nearly three times more than single-channel customers.

Total company comparable sales include net sales from our full-price stores that have been open for more than 52 weeks and from our Direct channel. This measure highlights the performance of existing stores open during the period, while excluding the impact of new store openings and closures. When a store in the total company comparable store base is temporarily closed for four or more days within a fiscal week, the store is excluded from the comparable store base; if it is temporarily closed for three or fewer days within a fiscal week, the store is included within the comparable store base. Certain of our competitors and other retailers may calculate total company comparable sales differently than we do. As a result, the reporting of our total company comparable sales may not be comparable to sales data made available by other companies.

Number of stores reflects all stores open at the end of a reporting period. In connection with opening new stores, we incur pre-opening costs. Pre-opening costs include expenses incurred prior to opening a new store and primarily consist of payroll, travel, training, marketing, initial opening supplies and costs of transporting initial inventory and fixtures to retail stores, as well as occupancy costs incurred from the time of possession of a store site to the opening of that store. These pre-opening costs are included in selling, general and administrative expenses and are generally incurred and expensed within 30 days of opening a new store.

Gross profit isequalto our netsaleslesscostsof goods sold.Gross profitas a percentageof our netsalesis referredto as grossmargin.

Costs of goods sold (“COGS”) includes the direct costs of sold merchandise, inventory shrinkage, and adjustments and reserves for excess, aged and obsolete inventory. We review our inventory levels on an ongoing basis to identify slow-moving merchandise and use ~~product~~ markdowns to liquidate these products. Changes in the assortment of our products may also impact our gross profit. The timing and level of markdowns are driven by customer acceptance of our merchandise. The Company’s COGS, and consequently gross profit, may not be comparable to those of other retailers, as inclusion of certain costs vary across the industry.

The primary drivers of the ~~costs of goods sold~~COGS are raw materials and transportation or freight costs, which fluctuate based on certain factors beyond our control, including labor conditions, ~~transportation or freight costs,~~ energy prices, currency fluctuations and commodity prices. We place orders with merchandise suppliers in United States dollars and, as a result, are not exposed to significant foreign currency exchange risk.

Selling,generaland administrativeexpenses include all operating costs not included in costs of goods sold. These expenses include all payroll and related expenses, occupancy costs, information systems costs and other operating expenses related to our stores

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and to our operations at our headquarters, including utilities, depreciation and amortization. These expenses also include marketing expense, including catalog production and mailing costs, warehousing, distribution and shipping costs, customer service operations, consulting and software services, professional services and other administrative costs.

Our historical revenue growth has been accompanied by increased selling, general and administrative expenses. The most significant increases were in occupancy costs associated with retail store expansion, and in marketing and payroll investments.

Adjusted ~~EBITDA~~earnings before interest, taxes, depreciation and amortization (“ Adjusted EBITDA”) and Adjusted EBITDA Margin. Adjusted EBITDA represents net income (loss) plus net interest expense, provision (benefit) for income taxes, depreciation and amortization, equity-based compensation expense, goodwill and indefinite-lived intangible assets impairment, write-off of property and equipment and other non-recurring expenses, primarily consisting of outside legal and professional fees associated with certain non-recurring transactions and events. We present Adjusted EBITDA on a consolidated basis because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative operating performance from period to period. We also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance of our business and for evaluating on a quarterly and annual basis actual results against such expectations. Further, we recognize Adjusted EBITDA as a commonly used

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measure in determining business value and as such, use it internally to report results. Adjusted EBITDA margin represents, for any period, Adjusted EBITDA as a percentage of net sales.

While we believe that Adjusted EBITDA is useful in evaluating our business, Adjusted EBITDA is a non-GAAP financial measure that has limitations as an analytical tool. Adjusted EBITDA should not be considered an alternative to, or substitute for, net income (loss), which is calculated in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA differently or not at all, which reduces the usefulness of Adjusted EBITDA as a tool for comparison. We recommend that you review the reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, and the calculation of the resultant Adjusted EBITDA margin below and not rely solely on Adjusted EBITDA or any single financial measure to evaluate our business.

Reconciliationof Net Income (Loss)to AdjustedEBITDAand Calculationof Adjusted EBITDA Margin~~EBITDAMargin~~

The followingtableprovidesa reconciliationof net income (~~loss)~~(loss) to AdjustedEBITDAand thecalculation of Adjusted EBITDA margin for the periods presented.~~EBITDAmarginfortheperiodspresented.~~


	For the Thirteen Weeks Ended						For the Twenty-Six Weeks Ended
(in thousands)	July 30, 2022			July 31, 2021			July 30, 2022			July 31, 2021
Statements of Operations Data:
Net income (loss)	$	17,805		$	(24,648	)	$	32,220		$	(42,956	)
Fair value adjustment of derivative		—			625			—			2,775
Fair value adjustment of warrants - related party (a)		—			38,338			—			56,984
Interest expense, net		3,547			4,217			7,205			8,563
Interest expense, net - related party		929			529			1,731			990
Income tax provision		5,912			4,446			10,922			5,838
Depreciation and amortization		6,331			7,295			13,044			14,871
Equity-based compensation expense (b)		976			649			1,718			1,092
Write-off of property and equipment (c)		71			630			163			716
Adjustment for exited retail stores (d)		(3	)		9			(246	)		(710	)
Impairment of long-lived assets (e)		—			—			108			—
Other non-recurring items (f)		4			616			4			1,468
Adjusted EBITDA	$	35,572		$	32,706		$	66,869		$	49,631
Net sales	$	160,343		$	159,236		$	317,412		$	288,322
Adjusted EBITDA margin		22.2	%		20.5	%		21.1	%		17.2	%

For the Thirteen Weeks Ended

For the Thirty-Nine Weeks Ended

(in thousands)

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Statements of Operations Data:

Net income (loss)

$
11,238

$
(23,159
)

$
(31,718
)

$
(112,462
)
Fair value adjustment of derivative

—

1,628

2,775

1,628

Fair value adjustment of warrants - related party ^(a)

—

—

56,984

—

Interest expense, net

4,567

4,753

13,130

13,640

Interest expense, net - related party

607

—

1,597

—

Income tax provision (benefit)

2,592

(7,313
)

8,430

(38,464
)
Depreciation and amortization

7,227

8,359

22,098

25,672

Equity-based compensation expense ^(b)

789

323

1,881

1,614

Write-off of property and equipment ^(c)

171

120

887

376

Impairment of goodwill and intangible assets

—

—

—

24,520

Adjustment for exited retail stores ^(d)

(471
)

(556
)

(1,181
)

(958
)
Impairment of long-lived assets ^(e)

—

906

—

27,493

Transaction costs ^(f)

—

12,912

—

20,636

Other non-recurring items ^(g)

240

410

1,708

2,393

Adjusted EBITDA

$
26,960

$
(1,617
)

$
76,591

$
(33,912
)
Net sales

$
151,731

$
117,224

$
440,053

$
300,829

Adjusted EBITDA margin

17.8
%

(1.4
)%

17.4
%

(11.3
)%
(a)

The fair value adjustment of warrants increased due to the increase in J.Jill’s stock price since January 30, 2021.

(b)

Represents expenses associated with equity incentive instruments granted to our management and board of directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grant.

(c)

Represents net gain or loss on the disposal of fixed assets.

(d)

Represents non-cash gains or losses associated with exiting store leases earlier than anticipated.

(e)

Represents impairment of long-lived assets related to leasehold improvements.

(f)

Represents items management believes are not indicative of ongoing operating performance, including professional fees, retention expenses and costs related to the COVID-19 pandemic.

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~~(a)~~

~~The fair value adjustment of warrants increased due to the increase in J.Jill’s stock price since January 30, 2021.~~

~~(b)~~

~~(c)~~

~~Represents net gain or loss on the disposal of fixed assets.~~

~~(d)~~

~~Represents non-cash gains associated with exiting store leases earlier than anticipated.~~

~~(e)~~

~~Represents impairment of long-lived assets related to the right-of-use assets and leasehold improvements.~~

~~(f)~~

Represents items management believes are not indicative of ongoing operating performance. For the thirteen and thirty-nine weeks ended October 31, 2020, these expenses are primarily composed of legal and advisory costs.

~~(g)~~

~~Represents items management believes are not indicative of ongoing operating performance, including professional fees, retention expenses and costs related to the COVID-19 pandemic.~~

Items Affecting Comparability of Financial Results

~~COVID-19 impact.~~ Our first and second quarter of Fiscal Year 2020 financial results were significantly impacted by COVID-19 as our stores were temporarily closed beginning in mid-March 2020 through most of the second quarter of Fiscal Year 2020 in efforts to stop the spread of the virus. Although the stores were temporarily closed and the Company lost revenues as a result, we continued to incur certain expenses, such as payroll and rent; therefore, ratios and other items may not be comparable to our third quarter of Fiscal Year 2021 financial results.

~~Impairment losses.~~ Our Fiscal Year 2020 year to date results include impairment charges of $52.0 million for long-lived assets (operating lease right-of-use asset and leasehold improvements), goodwill and intangible assets. See Note 4, ~~Asset Impairments, in Item I,~~ ~~Financial Statements, for additional information on these impairment losses.~~

Fair value adjustments. Fair value adjustments consist of the mark-to-market of warrants and derivative liabilities related to the debt restructuring consummated on September 30, 2020. These fair value adjustments were due to the increase in J.Jill’s stock price from January 30, 2021 through May 31, 2021. Effective May 31, 2021, these liabilities were reclassified to equity because from that date they can only be settled by exercise of the warrants into common stock. Our Fiscal Year 2021 results include fair value adjustments totaling ~~$(59.8)~~$39.0 million for the ~~thirty-nine week period~~thirteen weeks ended ~~October 30,~~July 31, 2021 and $59.8 million for the twenty-six weeks ended July 31, 2021 and no fair value adjustments for the thirteen ~~week period~~and twenty-six weeks ended ~~October~~July 30, ~~2021. Our Fiscal Year 2020 results include fair value adjustments totaling $1.6 million for both the thirteen week and the thirty-nine week periods ended October 31, 2020.~~2022. See Note 5, Debt and Note 8, Net ~~Loss per~~Income (Loss) Per Share, in Item 1, Financial Statements, for additional information on these fair value adjustments.

~~Results~~17~~of Operations~~

~~Thirteen weeks ended October 30, 2021 Compared to Thirteen weeks ended October 31, 2020~~

~~The followingtablesummarizesour consolidatedresultsof operationsfortheperiodsindicated:~~

For the Thirteen Weeks Ended

Change from the Thirteen Weeks Ended October 31, 2020 to the Thirteen Weeks

October 30, 2021

October 31, 2020

Ended October 30, 2021

(in thousands)

Dollars

% of Net
Sales

Dollars

% of Net
Sales

$ Change

% Change

Net sales

$
151,731

100.0
%

$
117,224

100.0
%

$
34,507

29.4
%
Costs of goods sold

47,196

31.1
%

48,225

41.1
%

(1,029
)

(2.1
)%
Gross profit

104,535

68.9
%

68,999

58.9
%

35,536

51.5
%
Selling, general and administrative expenses

85,531

56.4
%

92,184

78.6
%

(6,653
)

(7.2
)%
Impairment of long-lived assets

—

—

906

0.8
%

(906
)

100.0
%
Operating income (loss)

19,004

12.5
%

(24,091
)

(20.6
)%

43,095

(178.9
)%
Fair value adjustment of derivative

—

—

1,628

1.4
%

(1,628
)

(100.0
)%
Interest expense, net

4,567

3.0
%

4,753

4.1
%

(186
)

(3.9
)%
Interest expense, net - related party

607

0.4
%

—

—

607

100.0
%
Income (loss) before provision (benefit) for income taxes

13,830

9.1
%

(30,472
)

(26.0
)%

44,302

(145.4
)%
Income tax provision (benefit)

2,592

1.7
%

(7,313
)

(6.2
)%

9,905

(135.4
)%
Net income (loss)

$
11,238

7.4
%

$
(23,159
)

(19.8
)%

$
34,397

(148.5
)%

Table of Contents

Results of Operations

Thirteen weeks ended July 30, 2022 Compared to Thirteen weeks ended July 31, 2021

The following table summarizes our consolidated results of operations for the periods indicated:


	For the Thirteen Weeks Ended											Change from the Thirteen Weeks Ended July 31, 2021 to the Thirteen Weeks
	July 30, 2022					July 31, 2021						Ended July 30, 2022
(in thousands)	Dollars		% of Net Sales			Dollars			% of Net Sales			$ Change			% Change
Net sales	$	160,343		100.0	%	$	159,236			100.0	%	$	1,107			0.7	%
Costs of goods sold		47,869		29.9	%		49,883			31.3	%		(2,014	)		(4.0	)%
Gross profit		112,474		70.1	%		109,353			68.7	%		3,121			2.9	%
Selling, general and administrative expenses		84,281		52.6	%		85,846			53.9	%		(1,565	)		(1.8	)%
Operating income		28,193		17.6	%		23,507			14.8	%		4,686			19.9	%
Fair value adjustment of derivative		—		—			625			0.4	%		(625	)		(100.0	)%
Fair value adjustment of warrants - related party		—		—			38,338			24.1	%		(38,338	)		(100.0	)%
Interest expense, net		3,547		2.2	%		4,217			2.6	%		(670	)		(15.9	)%
Interest expense, net - related party		929		0.6	%		529			0.3	%		400			75.6	%
Income (loss) before provision for income taxes		23,717		14.8	%		(20,202	)		(12.7	)%		43,919			(217.4	)%
Income tax provision		5,912		3.7	%		4,446			2.8	%		1,466			33.0	%
Net income (loss)	$	17,805		11.1	%	$	(24,648	)		(15.5	)%	$	42,453			(172.2	)%

Net Sales

Net sales forthe thirteen weeks ended ~~October~~July 30, ~~2021~~2022 increased ~~$34.5~~$1.1 million, or ~~29.4%~~0.7%, to ~~$151.7~~$160.3 million from ~~$117.2~~$159.2 million for the thirteen weeks ended ~~October~~July 31, ~~2020.~~2021. The increase in net sales was due to total company comparable sales of ~~42.2%~~0.8%. Net sales benefited from an increase in Retail customer traffic as well as strong full-price sales and lower levels of promotions as compared to the third quarter of Fiscal Year 2020; however, the increase was primarily driven by the continued recovery of sales in the stores which reopened near the end of the second quarter of Fiscal Year 2020. Our stores were temporarily closed during the first and second quarters of Fiscal Year 2020 as a response to the COVID-19 pandemic. All stores were open during the third quarter of Fiscal Yearthirteen weeks ended July 31, 2021.

Our Retailchannel contributed ~~55.1%~~ 54.3% of our netsalesin the thirteen weeks ended ~~October~~July 30, ~~2021~~2022 and ~~36.7%~~53.6% in the thirteen weeks ended ~~October~~July 31, ~~2020.~~2021. Our Directchannel contributed ~~44.9%~~45.7% of our netsalesin the thirteen weeks ended ~~October~~July 30, ~~2021~~2022 and ~~63.3%~~46.4% in the thirteen weeks ended ~~October~~July 31, ~~2020.~~2021. We operated ~~260~~247 and ~~276~~261 retail stores at the end of these same periods, respectively.

Gross Profitand Costs of Goods Sold

Gross profitforthe thirteen weeks ended ~~October~~July 30, ~~2021~~2022 increased ~~$35.5~~ $3.1 million, or ~~51.5%~~2.9%, to ~~$104.5~~$112.5 million from ~~$69.0~~$109.4 million for the thirteen weeks ended ~~October~~July 31, ~~2020.~~2021. The gross margin for the thirteen weeks ended ~~October~~July 30, ~~2021~~2022 was ~~68.9%~~70.1% compared to ~~58.9%~~68.7% for the thirteen weeks ended ~~October~~July 31, ~~2020.~~2021. The gross margin for the thirteen weeks ended ~~October~~July 30, 2022 benefited from lower level of promotional discounts and for the thirteen weeks ended July 31, 2021 benefited from better full price selling and a lower level of promotional ~~discounts, while the gross margin~~discounts.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the thirteen weeks ended ~~October 31, 2020 was negatively impacted by added promotions, markdowns and liquidation actions to stimulate customer demand, particularly after the temporary closure of our stores.~~

~~Selling,Generaland AdministrativeExpenses~~

~~Selling,generaland administrativeexpensesforthe thirteen weeks ended October~~July 30, ~~2021~~2022 decreased ~~$6.7~~ $1.6 million, or ~~7.2%~~1.8%, to ~~$85.5~~$84.3 million from ~~$92.2~~$85.8 million for the thirteen weeks ended ~~October~~July 31, ~~2020.~~2021. The decrease is primarily driven by a ~~$13.9~~$1.3 million decrease in ~~professional services expenses, a $1.5 million decrease in cancelled projects~~occupancy expense, a ~~$1.1~~$1.0 million decrease in depreciation and amortization expense, ~~and~~ a ~~$0.7~~$0.4 million decrease in ~~occupancy~~insurance expense ~~partially~~and a $0.4 million decrease in professional fees, offset by a ~~$5.5 million increase in compensation and benefits expenses, a $3.2~~$0.9 million increase in marketing ~~expense, a $0.5 million increase in stock based compensation expense~~expenses and a ~~$0.3~~$0.6 million increase in shipping ~~expense. Professional services expenses were higher in the prior year due to costs associated with the debt restructuring agreement which was executed in the third quarter of Fiscal Year 2020.~~expenses. The decrease in occupancy costs is due to decreased rental expense from closing ~~sixteen~~fourteen stores since ~~November~~August 1, ~~2020~~2021, and favorable lease renegotiations. ~~The increase in compensation and benefits was~~Marketing expenses increased primarily due to a ~~$1.2~~$0.5 million increase in hourly and part-time wages which was driven by an increase in store operating hours compared to last year, a $3.7 million increase in incentive expenses, a $0.4 million increase in salaries and a $0.2 million increase in other benefits. The increase in marketing costs was primarily due to a $1.4 million increase in catalog costs and a $1.4 million increase in digital media expenses.

As a percentageof netsales,selling,generaland administrativeexpenses were ~~56.4%~~52.6% for the thirteen weeks ended ~~October~~July 30, ~~2021~~2022 compared to ~~78.6%~~53.9% forthe thirteen weeks ended ~~October~~July 31, ~~2020.~~2021.

Fair Value Adjustments

~~Fair~~For the thirteen weeks ended July 31, 2021, fair value adjustments consist of the mark-to-market of warrants and derivative liabilities related to the debt restructuring consummated on September 30, 2020.

Table of Contents

InterestExpense, Net

Interest expense, net, consists of interest expense on the ~~Term Loan, Priming Loan, Subordinated Facility~~term loan facility (the “Term Loan”), the senior secured priming term loan facility (the “Priming Loan”), the subordinated facility (the “Subordinated Facility”) and ~~ABL Facility,~~the revolving credit facility (the “ABL Facility”), partially offset by interest earned on cash. Interestexpense, net was ~~$5.2~~$4.5 million and ~~$4.8 million~~ ~~forthe thirteen weeks ended October 30, 2021~~ ~~and October 31, 2020, respectively~~.

~~Income Tax Provision (Benefit)~~

~~The incometax provision~~ ~~was $2.6 million for~~ ~~the thirteen weeks ended October 30, 2021compared to a benefit for income taxes of~~ ~~$7.3~~$4.7 million for the thirteen weeks ended ~~October~~July 30, 2022 and July 31, ~~2020,~~2021, respectively.

Income Tax Provision

The income tax provision was $5.9 million for the thirteen weeks ended July 30, 2022 compared to a provision for income taxes of $4.4 million for the thirteen weeks ended July 31, 2021, while our effectivetaxratesforthesameperiods were ~~18.8%~~24.9% and ~~24.0%~~(22.0%),respectively. The effective tax rate during the thirteen weeks ended ~~October~~July 30, ~~2021 differs from~~2022 is primarily driven by the ~~federal statutory rate~~impact of ~~21.0% due primarily to the impacts of executive compensation limitations and valuation allowance adjustments related to~~federal, state and local income ~~taxes.~~taxes and partial release of its valuation allowance on state deferred tax assets. The effective tax rate during the thirteen weeks ended ~~October~~July 31, ~~2020 was impacted by a benefit from the CARES Act, which was partially offset by the nondeductible goodwill impairment charge.~~

~~Table of Contents~~

~~Thirty-nine weeks ended October 30, 2021 Compared to Thirty-nine weeks ended October 31, 2020~~

~~The followingtablesummarizesour consolidatedresultsof operationsfortheperiodsindicated:~~

For the Thirty-Nine Weeks Ended

Change from the Thirty-Nine Weeks Ended October 31, 2020 to the Thirty-Nine Weeks

(in thousands)

October 30, 2021

October 31, 2020

Ended October 30, 2021

Dollars

% of Net
Sales

Dollars

% of Net
Sales

$ Change

% Change

Net sales

$
440,053

100.0
%

$
300,829

100.0
%

$
139,224

46.3
%
Costs of goods sold

138,339

31.4
%

126,645

42.1
%

11,694

9.2
%
Gross profit

301,714

68.6
%

174,184

57.9
%

127,530

73.2
%
Selling, general and administrative expenses

250,516

56.9
%

257,829

85.7
%

(7,313
)

(2.8
)%
Impairment of long-lived assets

—

—

27,493

9.1
%

(27,493
)

(100.0
)%
Impairment of goodwill

—

—

17,900

6.0
%

(17,900
)

(100.0
)%
Impairment of indefinite-lived intangible assets

—

—

6,620

2.2
%

(6,620
)

(100.0
)%
Operating income (loss)

51,198

11.7
%

(135,658
)

(45.1
)%

186,856

(137.7
)%
Fair value adjustment of derivative

2,775

0.6
%

1,628

0.5
%

1,147

70.5
%
Fair value adjustment of warrants - related party

56,984

12.9
%

—

—

56,984

100.0
%
Interest expense, net

13,130

3.0
%

13,640

4.5
%

(510
)

(3.7
)%
Interest expense, net - related party

1,597

0.4
%

—

—

1,597

100.0
%
Loss before provision (benefit) for income taxes

(23,288
)

(5.3
)%

(150,926
)

(50.2
)%

127,638

(84.6
)%
Income tax provision (benefit)

8,430

1.9
%

(38,464
)

(12.8
)%

46,894

(121.9
)%
Net loss

$
(31,718
)

(7.2
)%

$
(112,462
)

(37.4
)%

$
80,744

(71.8
)%

~~Net Sales~~

~~Net sales for the thirty-nine weeks ended October 30, 2021 increased$139.2 million, or 46.3%, to $440.1 million from $300.8 million for the thirty-nine weeks ended October 31, 2020.~~ ~~The increase in net sales was due to total company comparable sales of 24.9%.~~ Net sales benefited from strong full-price sales and lower levels of promotions as compared to the first thirty-nine weeks of Fiscal Year 2020; however, the increase was primarily driven by the reopening of our stores near the end of the second quarter of Fiscal Year 2020. Our stores were temporarily closed during the first and second quarter of Fiscal Year 2020 as a response to the COVID-19 pandemic. All stores were open during the first thirty-nine weeks of Fiscal Year 2021.

~~Our Retailchannel contributed 50.9% of our netsalesin the thirty-nine weeks ended October 30, 2021 and 34.7% in the thirty-nine weeks ended October 31, 2020.Our Directchannel contributed 49.1% of our netsalesin the thirty-nine weeks ended October 30, 2021 and 65.3% in the thirty-nine weeks ended October 31, 2020.We operated 260 and 276 retail stores at the end of these same periods, respectively.~~

~~Gross Profitand Costs of Goods Sold~~

~~Gross profitfor the thirty-nine weeks ended October 30, 2021~~ ~~increased~~ ~~$127.5 million, or 73.2%, to $301.7 million from $174.2 million for the thirty-nine weeks ended October 31, 2020.~~The gross margin for the thirty-nine weeks ended October 30, 2021 was 68.6% compared to 57.9% for the thirty-nine weeks ended October 31, 2020. The gross margin for the thirty-nine weeks ended October 30, 2021 benefited from better full price selling and a lower level of promotional discounts, while the gross margin for the thirty-nine weeks ended October 31, 2020 was negatively impacted by added promotions, markdowns and liquidation actions to stimulate customer demand, particularly after the temporary closure of our stores.

~~Selling,Generaland AdministrativeExpenses~~

~~Selling,generaland administrativeexpensesfor the thirty-nine weeks ended October 30, 2021~~ ~~decreased $7.3~~ million, or 2.8%, to $250.5 million from $257.8 million for the thirty-nine weeks ended October 31, 2020. The decrease is driven by a $21.9 million decrease in professional services expenses, a $3.6 million decrease in depreciation and amortization, a $4.3 million decrease in occupancy expense, partially offset by a $17.4 million increase in compensation and benefits, a $2.4 million increase in marketing expense, a $1.8 million increase in credit card fees, and a $2.0 million increase in shipping costs. Professional services expenses were higher during the thirty-nine weeks ended October 31, 2020 due to costs associated with the debt restructuring agreement which was

~~Table of Contents~~

executed in the third quarter of Fiscal Year 2020. The decrease in occupancy costs is due to decreased rental expense from closing sixteen stores since November 1, 2020 and favorable lease renegotiations. The increase in compensation and benefits was primarily due to a $7.4 million increase in hourly and part-time wages as the stores were open in Fiscal Year 2021, a $10.8 million increase in incentive expenses and a $1.5 million increase in benefits expense offset by a $3.0 million decrease in salaries expense. The increase in marketing costs was primarily due to a $3.0 million increase in digital media and retargeting expenses, partially offset by a $0.7 million decrease in catalog costs.

~~As a percentageof netsales,selling,generaland administrativeexpenses~~ ~~were 56.9% for~~ ~~the thirty-nine weeks ended October 30, 2021compared to 85.7% for the thirty-nine weeks ended October 31, 2020.~~

~~Fair Value Adjustments~~

~~Fair value adjustments consist of the mark-to-market of derivative liabilities related to the debt restructuring consummated on September 30, 2020.~~

~~InterestExpense, Net~~

~~Interest expense, net, consists of interest expense on the Term Loan, Priming Loan, Subordinated Facility and ABL Facility, partially offset by interest earned on cash. Interestexpense, netfor the thirty-nine weeks ended October 30, 2021~~ ~~increased $0.6~~ ~~million, or 3.7%, to $13.1 million from $13.6 million for the thirty-nine weeks ended October 31, 2020.~~

~~Income Tax Provision (Benefit)~~

~~The incometax provision~~ ~~was $8.4 million for~~ ~~the thirty-nine weeks ended October 30, 2021~~ ~~compared to a benefit for income taxes of $38.5 million~~ ~~for the thirty-nine weeks ended October 31, 2020, while our effectivetaxratesforthesameperiods were (36.1)% and 25.5%,respectively. The effective tax rate during the thirty-nine weeks ended October 30,~~ 2021 is a negative rate due to the nondeductible fair value adjustments of the warrants and embedded derivative, as well the impact of executive compensation limitations and state and local income taxes.

Twenty-six weeks ended July 30, 2022 Compared to Twenty-six weeks ended July 31, 2021

The following table summarizes our consolidated results of operations for the periods indicated


	For the Twenty-Six Weeks Ended											Change from the Twenty-Six Weeks Ended July 31, 2021 to the Twenty-Six Weeks
(in thousands)	July 30, 2022					July 31, 2021						Ended July 30, 2022
	Dollars		% of Net Sales			Dollars			% of Net Sales			$ Change			% Change
Net sales	$	317,412		100.0	%	$	288,322			100.0	%	$	29,090			10.1	%
Costs of goods sold		95,475		30.1	%		91,143			31.6	%		4,332			4.8	%
Gross profit		221,937		69.9	%		197,179			68.4	%		24,758			12.6	%
Selling, general and administrative expenses		169,859		53.5	%		164,985			57.2	%		4,874			3.0	%
Operating income		52,078		16.5	%		32,194			11.2	%		19,884			61.8	%
Fair value adjustment of derivative		—		—			2,775			1.0	%		(2,775	)		(100.0	)%
Fair value adjustment of warrants - related party		—		—			56,984			19.8	%		(56,984	)		100.0	%
Interest expense, net		7,205		2.3	%		8,563			3.0	%		(1,358	)		(15.9	)%
Interest expense, net - related party		1,731		0.5	%		990			0.3	%		741			100.0	%
Income (loss) before provision for income taxes		43,142		13.6	%		(37,118	)		(12.9	)%		80,260			(216.2	)%
Income tax provision		10,922		3.4	%		5,838			2.0	%		5,084			87.1	%
Net income (loss)	$	32,220		10.2	%	$	(42,956	)		(14.9	)%	$	75,176			(175.0	)%

Net Sales

Net sales for the twenty-six weeks ended July 30, 2022 increased $29.1 million, or 10.1%, to $317.4 million from $288.3 million for the twenty-six weeks ended July 31, 2021. Net sales benefited from an increase in Retail customer traffic as well as strong full-price sales and lower levels of promotions as compared to the twenty-six weeks ended July 31, 2021.

Our Retail channel contributed 54.0% of our net sales in the twenty-six weeks ended July 30, 2022 and 48.7% in the twenty-six weeks ended July 31, 2021. Our Direct channel contributed 46.0% of our net sales in the twenty-six weeks ended July 30, 2022 and 51.3% in the twenty-six weeks ended July 31, 2021. We operated 247 and 261 retail stores at the end of these same periods, respectively.

Gross Profit and Costs of Goods Sold

Gross profit for the twenty-six weeks ended July 30, 2022 increased $24.8 million, or 12.6%, to $221.9 million from $197.2 million for the twenty-six weeks ended July 31, 2021. The gross margin for the twenty-six weeks ended July 30, 2022 was 69.9% compared to 68.4% for the twenty-six weeks ended July 31, 2021. The gross margin for the twenty-six weeks ended July 30, 2022 and July 31, 2021 benefited from better full price selling and a lower level of promotional discounts.

Table of Contents

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the twenty-six weeks ended July 30, 2022 increased $4.9 million, or 3.0%, to $169.9 million from $165.0 million for the twenty-six weeks ended July 31, 2021. The increase is driven by a $4.1 million increase in compensation and benefits, a $2.1 million increase in marketing expenses, a $0.8 million increase in shipping, a $0.6 million increase in supplies costs and a $0.6 million increase in professional fees, offset by a $1.8 million decrease in depreciation and amortization expense and a $1.6 million decrease in occupancy costs. The increase in compensation and benefits was primarily due to a $3.0 million increase in incentive expenses and a $0.8 million increase in hourly and part-time wages. The increase in marketing costs was primarily due to a $1.0 million increase in catalog costs and a $0.9 million increase in digital and print media expenses. The decrease in occupancy costs is due to decreased rental expense from closing fourteen stores since August 1, 2021, and favorable lease renegotiations.

As a percentage of net sales, selling, general and administrative expenses were 53.5% for the twenty-six weeks ended July 30, 2022 compared to 57.2% for the twenty-six weeks ended July 31, 2021.

Fair Value Adjustments

Fair value adjustments consist of the mark-to-market of warrants and derivative liabilities related to the debt restructuring consummated on September 30, 2020.

Interest Expense, Net

Interest expense, net, consists of interest expense on the Term Loan, Priming Loan, Subordinated Facility and ABL Facility, partially offset by interest earned on cash. Interest expense, net for the twenty-six weeks ended July 30, 2022 decreased $1.4 million, or 15.9%, to $8.9 million from $9.6 million for the twenty-six weeks ended July 31, 2021.

Income Tax Provision

The income tax provision was $10.9 million for the twenty-six weeks ended July 30, 2022 compared to $5.8 million for the twenty-six weeks ended July 31, 2021, while our effective tax rates for the same periods were 25.3% and (15.7)%, respectively. The effective tax rate during the ~~thirty-nine~~twenty-six weeks ended ~~October 31, 2020 was impacted by a benefit from the CARES Act, which was partially offset~~July 30, 2022 is primarily driven by the ~~nondeductible goodwill impairment charge.~~

~~Liquidity~~impact of federal, state and ~~CapitalResources~~

~~General~~

~~In response to~~local income taxes and partial release of its valuation allowance on state deferred tax assets. The effective tax rate during the material adverse effect that the COVID-19 global pandemic had on our operations during Fiscal Year 2020, we improved our financial flexibility by restructuring our existing debt, issuing additional debt, reducing our expenses and maximizing cash receipts from our direct-to-consumer business channel. During Fiscal Yeartwenty-six weeks ended July 31, 2021 ~~we have achieved significant improvements in sales growth and gross margin expansion~~is a negative rate due to the general improvements in the economy and our focus on driving full price sales as customer traffic trends improved. Though COVID-19 remains present in the United States and around the world, our current projections show that we will have sufficient liquidity in the foreseeable future, even when incorporating downside risk factors. Therefore, we have now concluded that substantial doubt about the Company’s ability to continue as a going concern within one year after the date of issuancenondeductible fair value adjustments of the ~~financial statements has been alleviated.~~ warrants and embedded derivative, as well the impact of executive compensation limitations and state and local income taxes.

Liquidity and Capital Resources

General

Our primary sources of liquidity and capital resources are cash and cash equivalents generated from operating activities and availability under our ABL Facility. On April 15, 2022, we entered into an Amendment No. 5 to our ABL Credit Agreement (the “ABL Amendment”), by and among the Company, Jill Acquisition LLC, J.Jill Gift Card Solutions, Inc., Jill Intermediate LLC, the other guarantors party thereto from time to time, the other lenders party thereto from time to time and CIT Finance LLC, as the administrative agent and collateral agent. The ABL Amendment (i) extended the maturity date of the ABL Facility ~~which has a maturity of~~from May 8, 2023 ~~so long as certain conditions related~~to May 8, 2024, provided that if by November 4, 2023, the Priming Loan maturity date has not been appropriately extended to a date that is at least November 4, 2024, then the ABL Facility maturity date shall automatically be deemed to be November 4, 2023, and (ii) changed the benchmark interest rate applicable to the ~~maturity of~~loans under the ~~term loan are met.~~ABL Facility from LIBOR to the forward-looking secured overnight financing rate. As of ~~October~~July 30, ~~2021,~~2022, we had ~~$17.5~~$61.9 million in cash and ~~$35.6~~cash equivalents and $34.9 million of total availability under our ABL Facility. Our primary requirements for liquidity and capital are working capital and general corporate needs, including merchandise inventories, marketing, including catalog production and distribution, payroll, store occupancy costs and capital expenditures associated with opening new stores, remodeling existing stores and upgrading information systems.

Also, in Fiscal Year 2021, we ~~have filed our~~received $17.5 million of a total expected federal income tax ~~return for Fiscal Year 2020 and expect to receive a~~ refund in excess of $25.0 million ~~however,~~related to the fiscal year ended January 30, 2021 (“Fiscal Year 2020”). The timing ~~and amount~~ of ~~such~~the remaining expected refund is not known with certainty at this time. The tax refund amount benefited from the provisions under the CARES Act enacted in March 2020 most significantly from the provision that allows for net operating losses in Fiscal Year 2020 to be carried back to earlier tax years with higher tax rates than the current year.

The agreement governing our Priming Loan (the “Priming Credit ~~Agreement~~Agreement”) includes customary negative covenants, including covenants limiting the ability of the Company to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and purchases, pay dividends and

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distributions, enter into transactions with affiliates, and make payments in respect of junior indebtedness. The Priming Credit Agreement also has certain financial covenants (see Note 5, toDebt, in Item 1, Financial Statements, for additional information). As of July 30, 2022, the ~~condensed consolidated financial statements included in this Form 10-Q). The~~ Company is in compliance with all covenants.

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Under the Priming Credit Agreement, the Company has certain payment obligations during Fiscal Year 2021. On May 31, 2021, the Company had the choice to either (i) repay $4.9 million in aggregate principal amount of the loans under the Priming Credit Agreement, together with accrued and unpaid interest thereon or (ii) issue additional shares of Common Stock to the Priming Lenders in an amount equal to the greater of (I) 9.79% of the fully diluted shares of Common Stock as of October 1, 2020 less 656,717 shares and (II) a number of shares of Common Stock with an aggregate value of $0.5 million at the time of such issuance; provided, that the Priming Lenders shall not receive on such date shares of Common Stock having a value greater than $4.75 million (based on the volume-weighted average stock price of the preceding five trading days) at the time of such issuance. On May 31, 2021, the Company issued 272,097 shares to the Priming Lenders, with a value of approximately $5.2 million (based on the value of those shares as of close on that date), rather than repaying the $4.9 million since the minimum liquidity covenant would have increased to $25.0 million from $15.0 million if the Company had chosen to repay the $4.9 million of principal. In addition, the Priming Credit Agreement provides for a principal paydown of at least $25.0 million by August 30, 2021. The principal payment of $25.0 million, which was generated by operating cash flows, was made on August 27, 2021, avoiding additional PIK interest and fees.

Cash Flow Analysis

The followingtableshows our cashflowsinformationfortheperiodspresented:


	For the Thirty-Nine Weeks Ended						For the Twenty-Six Weeks Ended
(in thousands)	October 30, 2021			October 31, 2020			July 30, 2022			July 31, 2021
Net cash provided by (used in) operating activities	$	53,423		$	(20,364	)
Net cash provided by operating activities							$	35,457		$	27,862
Net cash used in investing activities		(2,488	)		(3,037	)		(2,161	)		(1,326	)
Net cash (used in) provided by financing activities		(37,869	)		11,071
Net cash used in financing activities								(7,397	)		(12,842	)

Net Cash provided by ~~(used in)~~ Operating Activities~~Activities~~

Net cash provided by operating activities increased by ~~$73.8~~$7.6 million ~~dollars as~~during the twenty-six weeks ended July 30, 2022 compared to the ~~prior year~~twenty-six weeks ended July 31, 2021 primarily due to a positive change in net income.

Net cash ~~generated from~~provided by operating ~~income as compared to cash being used by an operating loss~~activities during the prior year. The higher cash generated by operating income was partially offset by the return to more normalized vendor payment terms during the quarter as well as the repayments of vendor liabilities that had been extended, including rents that were deferred during Fiscal Year 2020 by landlords due to the pandemic.

~~Net cash~~ ~~provided by~~ ~~operatingactivitiesduring the thirty-nine~~twenty-six weeks ended ~~October~~July 30, ~~2021~~2022 was ~~$53.4~~$35.5 million.Key elementsof cash provided by operatingactivitieswere (i)net~~loss~~ income of ~~$31.4~~$32.2 million,(ii)adjustmentsto reconcilenetincometo netcashprovidedby operatingactivitiesof ~~$86.1~~$17.1 million, primarily driven by depreciation and amortization, and (iii) uses of cash totaling $13.9 million for net operating assets and liabilities to support increased sales, primarily driven by higher payments for accounts payable, accrued expenses and lease liabilities.

Net cash provided by operating activities during the twenty-six weeks ended July 31, 2021 was $27.9 million. Key elements of cash provided by operating activities were (i) net loss of $43.0 million, (ii) adjustments to reconcile net income to net cash provided by operating activities of $77.1 million, primarilydrivenby the noncash change in fair value of warrants, depreciationand amortization, deferred income taxes and noncash interest expense, partially offset by deferred rent incentives and adjustment for exited retail stores, and (iii) a use of cash from netoperatingassetsand liabilitiesof ~~$0.9~~$6.3 million,primarilydrivenby higher payments of accounts payable, partially due to payments for merchandise inventory and rents for retail stores that were deferred into Fiscal Year 2021 from Fiscal Year 2020.

~~Net cash~~ ~~used in~~ ~~operatingactivitiesduring the thirty-nine weeks ended October 31, 2020 was $20.4 million.Key elements of cashprovidedby operatingactivitieswere (i)net~~ ~~loss~~ ~~of $112.5 million,(ii)adjustmentsto reconcilenet incometo netcashprovidedby operatingactivitiesof $67.3 million,primarilydrivenby impairment of goodwill and intangible assets, impairment of long-lived assets and depreciation and amortization,~~ ~~partially offset by deferred income taxes, and (iii)~~ ~~source of cash from~~ ~~netoperatingassetsand liabilitiesof $24.8 million,primarily driven by increases in accounts payable and accrued expenses partially offset by increase in prepaid expense and other current assets.~~

Net Cash used in Investing Activities~~Activities~~

Net cash used in investingactivitiesduring the ~~thirty-nine~~twenty-six weeks ended ~~October~~July 30, 2022 and July 31, 2021 was ~~$2.5~~$2.2 million and $1.3 million, respectively, representingpurchasesof propertyand equipment. Purchases were lower during the thirty-nine weeks ended October 30, 2021 than the thirty-nine weeks ended October 31, 2020 due to our focus on conserving cash and there being no new store openings in Fiscal Year 2021.

~~Net cash~~ ~~used in~~ ~~investingactivitiesduring the thirty-nine weeks ended October 31, 2020was $3.0 million,representingpurchasesof propertyand equipmentrelatedinvestments in storesand information systems.~~

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Net Cash ~~(used in) provided by~~used in FinancingActivities

Net cash used in financing activities ~~declined $49.0~~was $7.4 million asfor the twenty-six weeks ended July 30, 2022 compared to $12.8 million in the prior ~~year as net borrowings under~~year. The change is primarily because the repayment of the outstanding ABL Facility ~~decreased due to~~in 2021 was greater than the ~~lessened impact~~repayment of the ~~COVID-19 pandemic.~~outstanding Term Loan in 2022.

~~Net cash used in financing~~Dividends~~activitiesduring the thirty-nine weeks ended October 30, 2021was $37.9 million,which was driven by the $25.0 million voluntary principal payment on the Priming Loan, which was made to avoid increased PIK interest and fees.~~

~~Net cash provided by financing activities during the thirty-nine weeks ended October 31, 2020 was $11.1 million, which was driven primarily by increased borrowings under the ABL Facility.~~

~~Dividends~~

The payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon such factors as earnings levels, capital requirements, restrictions imposed by applicable law, our overall financial condition, restrictions in our debt agreements and any other factors deemed relevant by our board of directors. As a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of restrictions on their ability to pay dividends to us, under our debt agreements and under future indebtedness that we or they may incur.

Credit Facilities~~Facilities~~

There were no short-term borrowings outstanding under the Company’s ABL Facility as of ~~October~~July 30, ~~2021 and $11.1 million of short-term borrowings outstanding as of January 30, 2021. At October 30, 2021~~2022 and January 29, 2022. At July 30, ~~2021,~~2022 and January 29, 2022, the Company had outstanding letters of credit in the ~~amounts~~amount of ~~$4.4~~$4.5 million, ~~and $2.9 million, respectively,~~ and had a maximum additional borrowing capacity of ~~$35.6~~$34.9 million and ~~$23.8~~$22.6 million, respectively.

Contractual Obligations~~Obligations~~

The Company’s contractual obligations consist primarily of debt obligations, interest payments, operating leases and purchase orders for merchandise inventory. These contractual obligations impact the Company’s short-term and long-term liquidity and capital resource needs.

~~Contingencies~~22

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Contingencies

We are subject to various legal proceedings that arise in the ordinary course of business. Although the outcome of such proceedings cannot be predicted with certainty, management does not believe that we are presently party to any legal proceedings the resolution of which management believes would have a material adverse effect on our ~~business,~~ financial ~~condition, operating results or cash flows.~~statements. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable.

~~Off~~-~~Balance~~Off-Balance Sheet Arrangements

We arenot a partyto any ~~off~~-off-balance sheet arrangements.~~balancesheetarrangements.~~

CriticalAccounting Policiesand Significant Estimates~~Estimates~~

The most significant accounting estimates involve a high degree of judgment or complexity. Management believes the estimates and judgments most critical to the preparation of our condensed consolidated financial statements and to the understanding of our reported financial results include those made in connection with revenue recognition, including accounting for gift card breakage and estimated merchandise returns; estimating the value of inventory; impairment assessments for goodwill and other indefinite-lived intangible assets, and long-lived ~~assets; and estimating equity-based compensation expense.~~assets. Management evaluates its policies and assumptions on an ongoing basis.

Our significant accounting policies related to these accounts in the preparation of our condensed consolidated financial statements are described under the heading “Management Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Estimates” in our ~~2020~~ Annual ~~Report.~~Report on Form 10-K for the fiscal year ended January 29, 2022
(the “2021 Annual Report”). As of the date of this filing, there were no significant changes to any of the critical accounting policies and estimates previously described in our ~~2020~~2021 Annual Report.

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Recent Accounting Pronouncements

Refer to Note 2,Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements included in this Quarterly Report, for recently adopted accounting standards, including the dates of adoption and estimated effects on our results of operations, financial position or cash flows.

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements.

These forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. All written and oral forward-looking statements made in connection with this Quarterly Report that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Risk Factors set forth in our ~~2020~~2021 Annual Report and other cautionary statements included therein and herein.

These forward-looking statements reflect our views with respect to future events as of the date of this Quarterly Report and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Quarterly Report. We anticipate that subsequent events and developments will cause our views to change. We qualify all of our forward-looking statements by these cautionary statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

There have been no material changes in our exposure to market risk during the ~~third~~second quarter of Fiscal Year ~~2021.~~2022. For a discussion of the Company’s exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in the Company’s ~~2020~~2021 Annual Report.

Item 4. Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of ~~October~~July 30, ~~2021,~~2022, that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this Quarterly Report has been recorded, processed, summarized and reported when required and the information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There have not been any changes in the Company’s internal control over financial reporting that occurred during the ~~third~~second quarter of Fiscal Year ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this report are described under the heading “Risk Factors” in our ~~2020~~2021 Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. As of the date of this Quarterly Report, there have been no material changes to the risk factors previously disclosed in our ~~2020~~2021 Annual Report. However, additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations and we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the ~~SEC.~~Securities and Exchange Commission.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits listed on the Exhibit Index are filed or furnished as part of this Quarterly Report.

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Exhibit Index


Exhibit Number		Description
3.1		Certificate of Incorporation of J.Jill, Inc. (incorporated by reference from Exhibit 3.1 to the Company’s Form 10-K, filed on April 28, 2017 (File No. 0001-38026))

3.2		Certificate of Amendment to the Certificate of Incorporation of J.Jill, Inc. (incorporated by reference from Exhibit 3.1 to the Company’s Form 8-K, filed on November 9, 2020 (File No. 001-38026)).

3.3		Bylaws of J.Jill, Inc. (incorporated by reference from Exhibit 3.2 to the Company’s 10-K, filed on April 28, 2017 (File No. 001-38026)).

31.1*		Certification of Principal Executive Officer required by Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer required by Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101)

*	~~Furnished herewith.~~

* Furnished herewith.

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SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	J.Jill, Inc.

Date: ~~December 14, 2021~~September 1, 2022	By:	/s/ Claire Spofford
		Claire Spofford
		Chief Executive Officer

Date: ~~December 14, 2021~~September 1, 2022	By:	/s/ Mark Webb
		Mark Webb
		Executive Vice President, Chief Financial Officer/Chief Operating Officer


Delaware	45-1459825
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


4 Batterymarch Park, Quincy, MA 02169		02169
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	JILL	New York Stock Exchange


Large accelerated filer	☐	Accelerated filer	☐☒
Non-accelerated filer	☒☐	Smaller reporting company	☒
		Emerging growth company	☒


	October 30, 2021			January 30, 2021			July 30, 2022			January 29, 2022
Assets
Current assets:
Cash	$	17,473		$	4,407
Cash and cash equivalents							$	61,856		$	35,957
Accounts receivable		8,073			7,793			4,090			5,811
Inventories, net		56,902			58,034			54,383			56,024
Prepaid expenses and other current assets		43,675			43,035			25,608			25,456
Total current assets		126,123			113,269			145,937			123,248
Property and equipment, net		60,047			73,906			50,427			57,329
Intangible assets, net		82,777			88,976			76,949			80,711
Goodwill		59,697			59,697			59,697			59,697
Operating lease assets, net		137,386			161,135			127,165			130,744
Other assets		140			199			97			120
Total assets	$	466,170		$	497,182		$	460,272		$	451,849
Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable	$	54,238		$	56,263		$	40,184		$	49,924
Accrued expenses and other current liabilities		51,851			43,854			45,584			48,853
Current portion of long-term debt		6,999			2,799			2,739			7,692
Current portion of operating lease liabilities		33,254			37,967			34,667			32,276
Borrowings under revolving credit facility		—			11,146
Total current liabilities		146,342			152,029			123,174			138,745
Long-term debt, net of discount and current portion		196,771			225,401			196,009			196,511
Long-term debt, net of discount - related party		4,908			3,311			7,336			5,605
Deferred income taxes		14,114			13,835			10,704			10,704
Operating lease liabilities, net of current portion		151,468			179,022			133,295			143,207
Warrants - related party (Note 8)		—			15,997
Derivative liability (Note 8)		—			2,436
Other liabilities		1,434			2,049			1,535			1,731
Total liabilities		515,037			594,080			472,053			496,503
Commitments and contingencies (see Note 11)
Shareholders’ Deficit
Common stock, par value $0.01 per share; 50,000,000 shares authorized; 9,987,999 and 9,631,633 shares issued and outstanding at October 30, 2021 and January 30, 2021, respectively		100			97
Common stock, par value $0.01 per share; 50,000,000 shares authorized; 10,148,504 and 10,001,422 shares issued and outstanding at July 30, 2022 and January 29, 2022, respectively								102			100
Additional paid-in capital		209,109			129,363			210,398			209,747
Accumulated deficit		(258,076	)		(226,358	)		(222,281	)		(254,501	)
Total shareholders’ deficit		(48,867	)		(96,898	)		(11,781	)		(44,654	)
Total liabilities and shareholders’ deficit	$	466,170		$	497,182		$	460,272		$	451,849


	For the Twenty-Six Weeks Ended
	July 30, 2022			July 31, 2021
Net Income (loss)	$	32,220		$	(42,956	)
Operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		13,042			14,869
Adjustment for exited retail stores		(246	)		(710	)
Loss on disposal of fixed assets		163			716
Noncash interest expense, net		2,609			1,933
Noncash change in fair value of derivative		—			2,775
Noncash change in fair value of warrants - related party		—			56,984
Equity-based compensation		1,718			1,092
Deferred rent incentives		(189	)		(673	)
Deferred income taxes		—			100
Changes in operating assets and liabilities:
Accounts receivable		1,721			2,288
Inventories		1,641			9,543
Prepaid expenses and other current assets		(152	)		(375	)
Accounts payable		(9,937	)		(18,465	)
Accrued expenses		(3,445	)		4,933
Operating lease assets and liabilities		(3,696	)		(4,129	)
Other noncurrent assets and liabilities		8			(63	)
Net cash provided by operating activities		35,457			27,862
Investing activities:
Purchases of property and equipment		(2,161	)		(1,326	)
Net cash used in investing activities		(2,161	)		(1,326	)
Financing activities:
Borrowings under revolving credit facility		—			52,670
Repayments of revolving credit facility		—			(63,816	)
Repayments on debt		(6,332	)		(1,399	)
Surrender of shares to pay withholding taxes		(1,065	)		(297	)
Net cash used in financing activities		(7,397	)		(12,842	)
Net change in cash		25,899			13,694
Cash and cash equivalents:
Beginning of Period		35,957			4,407
End of Period	$	61,856		$	18,101


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited)	2
	Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income (Loss) (Unaudited)	3
	Condensed Consolidated Statements of Shareholders’ Deficit (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
Exhibit Index		26
Signatures		27

						Additional						Total
	Common Stock					Paid-in			Accumulated			Shareholders’								Additional						Total
	Shares			Amount		Capital			Deficit			Deficit			Common Stock					Paid-in			Accumulated			Shareholders’
Balance, January 30, 2021		9,631,633		$	97	$	129,363		$	(226,358	)	$	(96,898	)
															Shares			Amount		Capital			Deficit			Deficit
Balance, January 29, 2022																10,001,422		$	100	$	209,747		$	(254,501	)	$	(44,654	)
Vesting of restricted stock units		111,248			1		(1	)		—			—			146,852			—		—			—			—
Surrender of shares to pay withholding taxes		(31,171	)		—		(271	)		—			(271	)		(48,430	)		—		(821	)		—			(821	)
Equity-based compensation		—			—		443			—			443			—			—		742			—			742
Net loss		—			—		—			(18,308	)		(18,308	)
Balance, May 1, 2021		9,711,710		$	98	$	129,534		$	(244,666	)	$	(115,034	)
Net income																—			—		—			14,415			14,415
Balance, April 30, 2022																10,099,844		$	100	$	209,668		$	(240,086	)	$	(30,318	)
Vesting of restricted stock units		1,075			—		—			—			—			62,090			2		(2	)		—			—
Surrender of shares to pay withholding taxes		(318	)		—		(19	)		—			(19	)		(13,430	)		—		(244	)		—			(244	)
Withholding tax on net share settlement of equity-based compensation plans		—			—		(7	)		—			(7	)
Equity-based compensation		—			—		649			—			649
Shares issued to Priming lenders (See Note 8)		272,097			2		5,210			—			5,212
Reclass of warrants to equity (See Note 8)		—			—		72,981			—			72,981
Net loss		—			—		—			(24,648	)		(24,648	)
Balance, July 31, 2021		9,984,564		$	100	$	208,348		$	(269,314	)	$	(60,866	)
Vesting of restricted stock units		4,864			—		—			—			—
Surrender of shares to pay withholding taxes		(1,429	)		—		—			—			—
Withholding tax on net share settlement of equity-based compensation plans		—			—		(28	)		—			(28	)
Equity-based compensation		—			—		789			—			789			—			—		976			—			976
Net income		—			—		—			11,238			11,238			—			—		—			17,805			17,805
Balance, October 30, 2021		9,987,999		$	100	$	209,109		$	(258,076	)	$	(48,867	)
Balance, July 30, 2022																10,148,504		$	102	$	210,398		$	(222,281	)	$	(11,781	)

	October 30, 2021		January 30, 2021
Contract liabilities:
Signing bonus	$	259	$	365
Unredeemed gift cards		5,280		6,818
Total contract liabilities ⁽¹⁾	$	5,539	$	7,183

Goodwill at February 1, 2020	$	77,597
Impairment losses (first quarter)		(17,900	)
Balance, January 30, 2021		59,697
Impairment losses		0
Balance, October 30, 2021	$	59,697

Fiscal Year	Estimated Amortization Expense
2021	$	1,377
2022		7,585
2023		6,990
2024		5,407
2025		4,705
Thereafter		22,713
Total	$	48,777

	Carrying Value of Debt
	October 30, 2021			January 30, 2021
Term Loan (principal of $4,963 and $5,007, respectively)	$	4,944		$	4,904
Priming Loan (principal of $203,403 and $229,773, respectively)		198,826			223,296
Subordinated Facility (principal and paid-in kind interest of $17,077 and $15,666, respectively)		4,908			3,311
Less: Current portion		(6,999	)		(2,799	)
Net long-term debt	$	201,679		$	228,712

			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Financial instruments not carried at fair value:
Total debt	$	208,678	$	—	$	210,177	$	—
Total financial instruments not carried at fair value	$	208,678	$	—	$	210,177	$	—

	For the Thirteen Weeks Ended											Change from the Thirteen Weeks Ended October 31, 2020 to the Thirteen Weeks
	October 30, 2021					October 31, 2020						Ended October 30, 2021
(in thousands)	Dollars		% of Net Sales			Dollars			% of Net Sales			$ Change			% Change
Net sales	$	151,731		100.0	%	$	117,224			100.0	%	$	34,507			29.4	%
Costs of goods sold		47,196		31.1	%		48,225			41.1	%		(1,029	)		(2.1	)%
Gross profit		104,535		68.9	%		68,999			58.9	%		35,536			51.5	%
Selling, general and administrative expenses		85,531		56.4	%		92,184			78.6	%		(6,653	)		(7.2	)%
Impairment of long-lived assets		—		—			906			0.8	%		(906	)		100.0	%
Operating income (loss)		19,004		12.5	%		(24,091	)		(20.6	)%		43,095			(178.9	)%
Fair value adjustment of derivative		—		—			1,628			1.4	%		(1,628	)		(100.0	)%
Interest expense, net		4,567		3.0	%		4,753			4.1	%		(186	)		(3.9	)%
Interest expense, net - related party		607		0.4	%		—			—			607			100.0	%
Income (loss) before provision (benefit) for income taxes		13,830		9.1	%		(30,472	)		(26.0	)%		44,302			(145.4	)%
Income tax provision (benefit)		2,592		1.7	%		(7,313	)		(6.2	)%		9,905			(135.4	)%
Net income (loss)	$	11,238		7.4	%	$	(23,159	)		(19.8	)%	$	34,397			(148.5	)%

	For the Thirty-Nine Weeks Ended												Change from the Thirty-Nine Weeks Ended October 31, 2020 to the Thirty-Nine Weeks
(in thousands)	October 30, 2021						October 31, 2020						Ended October 30, 2021
	Dollars			% of Net Sales			Dollars			% of Net Sales			$ Change			% Change
Net sales	$	440,053			100.0	%	$	300,829			100.0	%	$	139,224			46.3	%
Costs of goods sold		138,339			31.4	%		126,645			42.1	%		11,694			9.2	%
Gross profit		301,714			68.6	%		174,184			57.9	%		127,530			73.2	%
Selling, general and administrative expenses		250,516			56.9	%		257,829			85.7	%		(7,313	)		(2.8	)%
Impairment of long-lived assets		—			—			27,493			9.1	%		(27,493	)		(100.0	)%
Impairment of goodwill		—			—			17,900			6.0	%		(17,900	)		(100.0	)%
Impairment of indefinite-lived intangible assets		—			—			6,620			2.2	%		(6,620	)		(100.0	)%
Operating income (loss)		51,198			11.7	%		(135,658	)		(45.1	)%		186,856			(137.7	)%
Fair value adjustment of derivative		2,775			0.6	%		1,628			0.5	%		1,147			70.5	%
Fair value adjustment of warrants - related party		56,984			12.9	%		—			—			56,984			100.0	%
Interest expense, net		13,130			3.0	%		13,640			4.5	%		(510	)		(3.7	)%
Interest expense, net - related party		1,597			0.4	%		—			—			1,597			100.0	%
Loss before provision (benefit) for income taxes		(23,288	)		(5.3	)%		(150,926	)		(50.2	)%		127,638			(84.6	)%
Income tax provision (benefit)		8,430			1.9	%		(38,464	)		(12.8	)%		46,894			(121.9	)%
Net loss	$	(31,718	)		(7.2	)%	$	(112,462	)		(37.4	)%	$	80,744			(71.8	)%