J.Jill (JILL) 10-Q 12 Jun 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Apr. 29, 2017	Jun. 08, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 29, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Trading Symbol	JILL
Entity Registrant Name	J.Jill, Inc.
Entity Central Index Key	1,687,932
Current Fiscal Year End Date	--02-03
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		43,747,944

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Apr. 29, 2017	Jan. 28, 2017
Current assets:
Cash	$ 15,332	$ 13,468
Accounts receivable	10,457	3,851
Inventories, net	73,583	66,641
Prepaid expenses and other current assets	19,054	18,559
Receivable from related party	2,227	1,922
Total current assets	120,653	104,441
Property and equipment, net	102,359	102,322
Intangible assets, net	159,852	163,483
Goodwill	197,026	197,026
Other assets	863	1,033
Total assets	580,753	568,305
Current liabilities:
Accounts payable	38,540	38,438
Accrued expenses and other current liabilities	47,821	46,121
Current portion of long-term debt	2,799	2,799
Total current liabilities	89,160	87,358
Long-term debt, net of discount and current portion	264,243	264,440
Deferred income taxes	72,887	73,511
Other liabilities	23,243	20,132
Total liabilities	449,533	445,441
Commitments and contingencies (see Note 9)
Shareholders' / Members' Equity
Common stock, par value $0.01 per share; 250,000,000 shares authorized; 43,747,944 shares issued and outstanding at April 29, 2017	437
Common units, zero par value, 1,000,000 units authorized, issued and outstanding at January 28, 2017	0	0
Contributed capital		116,743
Additional paid-in capital	116,635
Accumulated earnings	14,148	6,121
Total shareholders' / members' equity	131,220	122,864
Total liabilities and shareholders' / members' equity	$ 580,753	$ 568,305

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Apr. 29, 2017	Jan. 28, 2017
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.01
Common stock, shares authorized	250,000,000
Common stock, shares issued	43,747,944
Common stock, shares outstanding	43,747,944
Common units, par value
Common units, authorized		1,000,000
Common units, issued		1,000,000
Common units, outstanding		1,000,000

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Income Statement [Abstract]
Net sales	$ 166,126	$ 147,665
Costs of goods sold	50,518	46,159
Gross profit	115,608	101,506
Selling, general and administrative expenses	97,033	87,072
Operating income	18,575	14,434
Interest expense	4,945	4,112
Income before provision for income taxes	13,630	10,322
Provision for income taxes	5,603	4,249
Net income and total comprehensive income	$ 8,027	$ 6,073
Net income per common share attributable to common shareholders:
Basic	$ 0.19	$ 0.14
Diluted	$ 0.18	$ 0.14
Weighted average number of common shares outstanding:
Basic	42,518,143	43,747,944
Diluted	43,680,485	43,747,944

Consolidated Statement of Share

Consolidated Statement of Shareholders' / Members' Equity - 3 months ended Apr. 29, 2017 - USD ($) $ in Thousands	Total	Common Units [Member]	Common Stock [Member]	Contributed Capital [Member]	Additional Paid-in Capital [Member]	Accumulated Earnings [Member]
Beginning balance at Jan. 28, 2017	$ 122,864			$ 116,743		$ 6,121
Beginning balance, units at Jan. 28, 2017	1,000,000	1,000,000
Other equity transactions	$ 305			$ 305
Other equity transactions, units	0	0	0	0	0	0
Other equity transactions, shares	0	0	0	0	0	0
Corporate conversion			$ 0	$ (117,048)	$ 117,048
Corporate conversion, units		(1,000,000)
Corporate conversion, shares	0	0	0	0	0	0
Issuance of common stock			$ 437		$ (437)
Issuance of common stock, units	0	0	0	0	0	0
Issuance of Common Stock, shares			43,747,944
Equity-based compensation	$ 24				$ 24
Equity-based compensation, shares	0	0	0	0	0	0
Net income	$ 8,027					$ 8,027
Ending Balance at Apr. 29, 2017	$ 131,220		$ 437	$ 0	$ 116,635	$ 14,148
Ending balance, shares at Apr. 29, 2017	43,747,944		43,747,944

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Statement of Cash Flows [Abstract]
Net income	$ 8,027	$ 6,073
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	8,793	10,258
Loss on disposal of fixed assets	2
Noncash amortization of deferred financing and debt discount costs	667	342
Equity-based compensation	24	75
Deferred rent liability	249	771
Deferred income taxes	(624)	3,905
Changes in operating assets and liabilities:
Accounts receivable	(6,606)	(6,260)
Tax receivable		299
Inventories	(6,942)	(1,443)
Prepaid expenses and other current assets	(495)	(951)
Accounts payable	(380)	(8,694)
Accrued taxes payable	(941)
Accrued expenses	2,202	(3,616)
Other noncurrent assets and liabilities	3,011	622
Net cash provided by operating activities	6,987	1,381
Investing activities:
Purchases of property and equipment	(4,423)	(6,754)
Net cash used in investing activities	(4,423)	(6,754)
Financing activities:
Repayments on long-term debt	(700)	(625)
Net cash used in financing activities	(700)	(625)
Net change in cash	1,864	(5,998)
Cash:
Beginning of Period	13,468	27,505
End of Period	$ 15,332	$ 21,507

Description of Business

Description of Business	3 Months Ended
	Apr. 29, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	J.Jill, Inc., “J.Jill” or the “Company,” is a nationally recognized women’s apparel brand focused on a loyal, engaged and affluent customer in the attractive 40-65 age segment. The J.Jill brand represents an easy, relaxed and inspired style that reflects the confidence and comfort of a woman with a rich, full life. We operate a highly profitable omni-channel platform that is well diversified across our direct channels. We began as a catalog company and have been a pioneer of the omni-channel model with a compelling presence across stores, website and catalog since 1999. We have developed an industry-leading customer database that allows us to match approximately 98% of transactions to an identifiable customer. We take a data-centric approach, in which we leverage our database and apply our insights to manage our business as well as to acquire and engage customers to drive optimum value and productivity.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Apr. 29, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation Our interim 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 (“U.S. GAAP”) have been omitted, in accordance with the rules of the Securities and Exchange Commission (the “SEC”). In the opinion of management, these interim consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the financial position and results of operations of the Company. The consolidated balance sheet as of January 28, 2017 is derived from the audited consolidated balance sheet as of that date. The unaudited results of operations for the thirteen weeks ended April 29, 2017 are not necessarily indicative of future results or results to be expected for the full year ending February 3, 2018. You should read these statements in conjunction with our audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended January 28, 2017. During the first quarter of 2017, Jill Intermediate LLC completed a corporate conversion from a Delaware limited liability company into a Delaware corporation and changed its name to J.Jill, Inc. Subsequent to this corporate conversion, J.Jill, Inc. completed an initial public offering (“IPO”). Refer to Note 7 Shareholders’ Equity Recently Adopted Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Accounting for Goodwill Impairment In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share—Based Payment Accounting In July 2015, the FASB issued ASU 2015-11 , Simplifying the Measurement of Inventory Recently Issued Accounting Pronouncements In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra—Entity Transfers of Assets Other Than Inventory In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments, In February 2016, the FASB issued ASU 2016-02, Leases In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers—Topic 606 Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers: Principal versus Agent Considerations Revenue from Contracts with Customers (Topic 606) Revenues from Contracts with Customers: Narrow—Scope Improvements and Practical Expedients Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,

Debt

Debt	3 Months Ended
	Apr. 29, 2017
Debt Disclosure [Abstract]
Debt	3. Debt The components of the Company’s outstanding debt were as follows (in thousands): April 29, 2017 January 28, 2017 Term loan $ 275,276 $ 275,975 Discount on debt and debt issuance costs (8,234 ) (8,736 ) Less: Current portion (2,799 ) (2,799 ) Net long-term debt $ 264,243 $ 264,440 The Company was in compliance with all financial covenants as of April 29, 2017.

Income Taxes

Income Taxes	3 Months Ended
	Apr. 29, 2017
Income Tax Disclosure [Abstract]
Income Taxes	4. Income Taxes The Company recorded income tax expense of $5.6 million and $4.2 million during the thirteen weeks ended April 29, 2017 and the thirteen weeks ended April 30, 2016, respectively. The effective tax rates were 41.1% and 41.2% in the thirteen weeks ended April 29, 2017 and the thirteen weeks ended April 30, 2016, respectively. The effective tax rate for the thirteen weeks ended April 29, 2017 and the thirteen weeks ended April 30, 2016 exceeds the federal statutory rate of 35.0% primarily due to state income taxes and non-deductible IPO related expenses.

Earnings Per Share

Earnings Per Share	3 Months Ended
	Apr. 29, 2017
Earnings Per Share [Abstract]
Earnings Per Share	5. Earnings Per Share The following table summarizes the computation of basic and diluted net income per share attributable to common shareholders for the thirteen weeks ended April 29, 2017 and the thirteen weeks ended April 30, 2016, respectively (in thousands, except share and per share data): For the Thirteen Weeks Ended April 29, 2017 April 30, 2016 Numerator Net income per common share attributable to common shareholders: $ 8,027 $ 6,073 Denominator Weighted average number of common shares outstanding, basic: 42,518,143 43,747,944 Dilutive effect of restricted shares 1,162,342 — Weighted average number of common shares outstanding, diluted: 43,680,485 43,747,944 Net income per common share attributable to common shareholders, basic: $ 0.19 $ 0.14 Net income per common share attributable to common shareholders, diluted: $ 0.18 $ 0.14 The weighted average common shares for the diluted earnings per share calculation exclude the impact of outstanding stock options if the assumed proceeds per share of the option is in excess of the related fiscal period’s average price of the Company’s common stock. Such options are excluded because they would have an antidilutive effect. There were 83,565 such options excluded for the thirteen weeks ended April 29, 2017. There were no options excluded for the thirteen weeks ended April 30, 2016.

Equity-Based Compensation

Equity-Based Compensation	3 Months Ended
	Apr. 29, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Equity-Based Compensation	6. Equity-Based Compensation Compensation expense was less than $0.1 million and $0.1 million the thirteen weeks ended April 29, 2017 and the thirteen weeks ended April 30, 2016, respectively.

Shareholders' Equity

Shareholders' Equity	3 Months Ended
	Apr. 29, 2017
Equity [Abstract]
Shareholders' Equity	7. Shareholders’ Equity On February 24, 2017, the Company completed a corporate conversion from a Delaware limited liability company named Jill Intermediate LLC into a Delaware corporation and changed its name to J.Jill, Inc. In conjunction with the corporate conversion, all of the outstanding equity of Jill Intermediate LLC converted into shares of common stock of J.Jill, Inc. Following the Company’s conversion from a limited liability company to a corporation, JJill Holdings, Inc. merged with and into J.Jill, Inc. on February 24, 2017, with J.Jill, Inc. continuing as the surviving entity. On March 14, 2017, J.Jill, Inc. completed an IPO. An existing shareholder of the Company sold 11,666,667 shares of the Company’s common stock at a share price of $13.00 per share. The underwriters subsequently elected to exercise their over-allotment option to purchase an additional 865,000 shares of common stock from the selling shareholder at the IPO price of $13.00 per share. All proceeds of the IPO, net of the underwriter’s discount, were distributed to the selling shareholder. Upon the closing of the IPO on March 14, 2017, JJill Topco Holdings, LP (“Topco”) completed a distribution of J.Jill, Inc. common stock to its partners that held vested and unvested common interests in accordance with its limited partnership agreement. The shares of J.Jill, Inc. common stock distributed in respect of unvested common interests became restricted J.Jill, Inc. common stock, subject to the original vesting terms of such common interests. Holders of vested and unvested common interests received a pro-rata distribution of vested and unvested J.Jill, Inc. common stock, equal to their fair value of common interests immediately prior to the distribution, resulting in no incremental fair value. As a result, 2,385,001 shares of the 43,747,944 shares of J.Jill, Inc. common shares are treated as restricted shares and will vest in accordance with the original vesting terms of the common interests. All restricted shares of J.Jill, Inc. continue to be considered outstanding shares for legal purposes. The restricted shares are contingently issuable upon vesting and have been included in diluted earnings per share.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Apr. 29, 2017
Related Party Transactions [Abstract]
Related Party Transactions	8. Related Party Transactions For the thirteen weeks ended April 29, 2017, the Company incurred an immaterial amount out-of-pocket expenses in relation to the advisory services agreement with a related party. These expenses are included in operating expenses in the accompanying consolidated statements of operations and comprehensive income. The Company has a net receivable from related parties of $2.2 million recorded at April 29, 2017. This is a receivable from Topco and made up of $0.3 million in working capital settlements related to a 2015 acquisition and $1.9 million in cash paid directly by investors to Topco for an ownership stake in J.Jill, Inc.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Apr. 29, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	9. Commitments and Contingencies Operating Lease Agreements The Company recorded a deferred lease liability of $7.2 million and $6.5 million as of April 29, 2017 and January 28, 2017, respectively. In certain instances, the Company also receives allowances for its store leases, which it accrues and amortizes ratably over the life of the lease. The Company maintained a tenant improvement incentive liability of $12.5 million and $9.9 million as of April 29, 2017 and January 28, 2017, respectively. Total rental expense was $14.4 million and $13.6 million for the thirteen weeks ended April 29, 2017 and the thirteen weeks ended April 30, 2016, respectively, exclusive of contingent rental expense recorded of $0.4 million and $0.4 million for the same respective periods. Legal Proceedings The Company is subject to various legal proceedings that arise in the ordinary course of business. The Company accrues for liabilities associated with these proceedings which are determined to be probable and which can be reasonably estimated. Although the outcome of such proceedings cannot be predicted with certainty, management does not believe that it is reasonably possible that these outstanding proceedings will result in unaccrued losses that would be material. The Company maintains insurance policies to mitigate the financial impact of certain litigation.

Subsequent Events

Subsequent Events	3 Months Ended
	Apr. 29, 2017
Subsequent Events [Abstract]
Subsequent Events	10. Subsequent Events The Company is not aware of any material subsequent events which would require recognition or disclosure in the consolidated financial statements.

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Apr. 29, 2017
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation Our interim 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 (“U.S. GAAP”) have been omitted, in accordance with the rules of the Securities and Exchange Commission (the “SEC”). In the opinion of management, these interim consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the financial position and results of operations of the Company. The consolidated balance sheet as of January 28, 2017 is derived from the audited consolidated balance sheet as of that date. The unaudited results of operations for the thirteen weeks ended April 29, 2017 are not necessarily indicative of future results or results to be expected for the full year ending February 3, 2018. You should read these statements in conjunction with our audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended January 28, 2017. During the first quarter of 2017, Jill Intermediate LLC completed a corporate conversion from a Delaware limited liability company into a Delaware corporation and changed its name to J.Jill, Inc. Subsequent to this corporate conversion, J.Jill, Inc. completed an initial public offering (“IPO”). Refer to Note 7 Shareholders’ Equity
Recently Adopted and Issued Accounting Pronouncements	Recently Adopted Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Accounting for Goodwill Impairment In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share—Based Payment Accounting In July 2015, the FASB issued ASU 2015-11 , Simplifying the Measurement of Inventory Recently Issued Accounting Pronouncements In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra—Entity Transfers of Assets Other Than Inventory In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments, In February 2016, the FASB issued ASU 2016-02, Leases In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers—Topic 606 Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers: Principal versus Agent Considerations Revenue from Contracts with Customers (Topic 606) Revenues from Contracts with Customers: Narrow—Scope Improvements and Practical Expedients Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,

Debt (Tables)

Debt (Tables)	3 Months Ended
	Apr. 29, 2017
Debt Disclosure [Abstract]
Components of Outstanding Debt	The components of the Company’s outstanding debt were as follows (in thousands): April 29, 2017 January 28, 2017 Term loan $ 275,276 $ 275,975 Discount on debt and debt issuance costs (8,234 ) (8,736 ) Less: Current portion (2,799 ) (2,799 ) Net long-term debt $ 264,243 $ 264,440

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Apr. 29, 2017
Earnings Per Share [Abstract]
Computation of Basic and Diluted Net Income Per Share Attributable to Common Shareholders	The following table summarizes the computation of basic and diluted net income per share attributable to common shareholders for the thirteen weeks ended April 29, 2017 and the thirteen weeks ended April 30, 2016, respectively (in thousands, except share and per share data): For the Thirteen Weeks Ended April 29, 2017 April 30, 2016 Numerator Net income per common share attributable to common shareholders: $ 8,027 $ 6,073 Denominator Weighted average number of common shares outstanding, basic: 42,518,143 43,747,944 Dilutive effect of restricted shares 1,162,342 — Weighted average number of common shares outstanding, diluted: 43,680,485 43,747,944 Net income per common share attributable to common shareholders, basic: $ 0.19 $ 0.14 Net income per common share attributable to common shareholders, diluted: $ 0.18 $ 0.14

Description of Business - Addit

Description of Business - Additional Information (Detail)	3 Months Ended
	Apr. 29, 2017
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Percentage of transactions matching identifiable customer	98.00%
Minimum [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Age range of customers	40 years
Maximum [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Age range of customers	65 years

Debt - Components of Outstandin

Debt - Components of Outstanding Debt (Detail) - USD ($) $ in Thousands	Apr. 29, 2017	Jan. 28, 2017
Debt Instrument [Line Items]
Discount on debt and debt issuance costs	$ (8,234)	$ (8,736)
Less: Current portion	(2,799)	(2,799)
Net long-term debt	264,243	264,440
Term Loan [Member]
Debt Instrument [Line Items]
Term loan	$ 275,276	$ 275,975

Income Taxes - Additional Infor

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Income Tax Disclosure [Abstract]
Income tax expense	$ 5,603	$ 4,249
Effective income tax rate	41.10%	41.20%
Federal statutory rate	35.00%	35.00%

Earnings Per Share - Computatio

Earnings Per Share - Computation of Basic and Diluted Net Income Per Share Attributable to Common Shareholders (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Numerator
Net income per common share attributable to common shareholders:	$ 8,027	$ 6,073
Denominator
Weighted average number of common shares outstanding, basic:	42,518,143	43,747,944
Dilutive effect of restricted shares	1,162,342
Weighted average number of common shares outstanding, diluted:	43,680,485	43,747,944
Net income per common share attributable to common shareholders, basic:	$ 0.19	$ 0.14
Net income per common share attributable to common shareholders, diluted:	$ 0.18	$ 0.14

Earnings Per Share - Additional

Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Earnings Per Share [Abstract]
Antidilutive stock options excluded from the computation of diluted earnings per share	83,565	0

Equity-Based Compensation - Add

Equity-Based Compensation - Additional Information (Detail) - USD ($)	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	$ 100,000	$ 100,000

Shareholders' Equity - Addition

Shareholders' Equity - Additional Information (Detail) - $ / shares	Mar. 14, 2017	Apr. 29, 2017
Equity [Abstract]
Limited liability company, business, cessation date		Feb. 24, 2017
Entity information, former legal or registered name		Jill Intermediate LLC
Entity information, date to change former legal or registered name		Feb. 24, 2017
Common stock offered	11,666,667
Common stock offer price	$ 13
Underwriters option to purchase additional common stock	865,000
Shares issued, Restricted Stock	2,385,001
Common stock issued	43,747,944

Related Party Transactions - Ad

Related Party Transactions - Additional Information (Detail) - Topco [Member] $ in Millions	3 Months Ended
	Apr. 29, 2017USD ($)
Related Party Transaction [Line Items]
Receivable from related party	$ 2.2
Working capital settlements related to acquisition	0.3
Cash payment to the related party	$ 1.9

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016	Jan. 28, 2017
Commitments and Contingencies Disclosure [Abstract]
Deferred lease liability	$ 7.2		$ 6.5
Tenant improvement incentive liability	12.5		$ 9.9
Rent expense	14.4	$ 13.6
Contingent rental expense	$ 0.4	$ 0.4