Exhibit 99.1
FOR IMMEDIATE RELEASE
| Approved by: | Olga L. Conley Chief Financial Officer (617) 376-4300 URL: http://www.jjill.com | |||
Investor Relations: | Chad Jacobs Integrated Corporate Relations, Inc. (203) 222-9013 |
THE J. JILL GROUP REPORTS FIRST QUARTER RESULTS
Quincy, MA, May 1, 2003—The J. Jill Group, Inc. (Nasdaq: JILL) today reported financial results for the first quarter ended March 29, 2003. Net sales for the first quarter increased by 12.3% to $82.4 million from $73.4 million reported in the prior year. Operating income for the quarter totaled $1.5 million or 1.8% of net sales compared to $4.8 million or 6.5% of net sales in the prior year. The Company posted net income for the quarter of $768,000 or $0.04 per diluted share versus $2.7 million or $0.14 per diluted share in the first quarter of the previous year. Regarding first quarter sales productivity, direct segment demand per 1,000 square inches circulated was down slightly while retail sales per square foot declined by 14% when compared to last year.
Gordon R. Cooke, President and Chief Executive Officer, commented, "While we are pleased to be able to report results within our previously announced financial target range, our business during the quarter was impacted by a number of external factors including the significant geopolitical situation, continued economic weakness, adverse weather conditions and a calendar shift related to the Easter holiday. The combination of these events has made it increasingly difficult to discern any predictable trends in our business. For example, our spring direct business generated strong results in January and March and lackluster results in February and April. At the same time our retail stores posted mixed results in January and February and have seen improved performance in March and April. Due to this lack of predictability and visibility, we are unable to affirm or disavow any future financial targets at this point in time."
Mr. Cooke continued, "Despite the short-term challenges that we are all facing, our long-term strategy remains to continue to build J. Jill into a national lifestyle brand accessible through multiple distribution channels. With 38% of our sales coming from retail, 21% from e-commerce and 41% from our catalog in the first quarter, we have made tremendous progress toward this goal in just a little over three years. Importantly, we now have a potent combination of a solid balance sheet, 93 retail stores open in 30 states, nearly 1.1 million twelve-month buyers and 827,000 customer e-mail addresses - all of which position us well for the future."
"As we have previously indicated, to address the internal challenges of transitioning from a single-channel to a multi-channel retailer, we continue to make certain key infrastructure investments that we believe will help us deliver long-term growth and increased shareholder value. Specifically, we continue to make progress in improving and streamlining our product development, sourcing and design process; in creating an enterprise-wide customer database; and in enhancing the processes within our retail segment. We are also committed to a further strengthening of our management team by the addition of seasoned high-level executives in the aforementioned areas," concluded Mr. Cooke.
The J. Jill Group's conference call to discuss its first quarter earnings will be broadcast live today at 4:30 p.m. Eastern Time atwww.jjillgroup.com, and will be archived online within one hour of the completion of the conference call.
-more-
Page: 2
The J. Jill Group is a multi-channel specialty retailer of high quality women's apparel, accessories and footwear. The Company currently markets its products through catalogs, retail stores and an e-commerce website. J. Jill is designed to appeal to active, affluent women age 35 and older.
This press release contains certain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Various factors could cause the results of The J. Jill Group to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: the continued success or possible future failure of the retail store initiative; the ability of J. Jill to effectively manage its operations and growth in a multiple distribution channel environment; significant changes in customer acceptance of J. Jill's product offerings; changes in competition in the apparel industry; changes in consumer spending, fashion trends and consumer preferences; changes in, or the failure to comply with, federal and state tax and other government regulations; the customary risks of purchasing merchandise abroad, including longer lead times, higher initial purchase commitments and foreign currency fluctuations; timely receipts of inventory from vendors; possible future increases in expenses and labor and employee benefit costs; the ability of J. Jill to attract and retain qualified personnel; business abilities and judgment of management; the existence or absence of brand awareness; the existence or absence of publicity, advertising and promotional efforts; the success or failure of operating initiatives; the mix of J. Jill's sales between full price and liquidation merchandise; general political, economic and business conditions and other factors, including those detailed from time to time in J. Jill's SEC reports, including its Annual Report on Form 10-K filed on March 28, 2003. J. Jill disclaims any intent or obligation to update these forward-looking statements.
(tables to follow)
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| | Three Months Ended | ||||||
|---|---|---|---|---|---|---|---|
| In thousands, except per share data—unaudited | March 29, 2003 | March 30, 2002 | |||||
| Net sales | $ | 82,363 | $ | 73,357 | |||
| Cost of products and merchandising | 56,808 | 47,936 | |||||
| Gross margin | 25,555 | 25,421 | |||||
| Selling, general and administrative expenses | 24,051 | 20,668 | |||||
| Operating income | 1,504 | 4,753 | |||||
| Interest, net | 196 | 211 | |||||
| Income tax provision | 540 | 1,846 | |||||
| Net income | $ | 768 | $ | 2,696 | |||
| Earnings per share: | |||||||
| Basic | $ | 0.04 | $ | 0.15 | |||
| Diluted | $ | 0.04 | $ | 0.14 | |||
| Weighted average shares outstanding: | |||||||
| Basic | 19,567 | 18,360 | |||||
| Diluted | 19,987 | 19,562 | |||||
THE J. JILL GROUP, INC.
NET SALES SUMMARY
| | Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| In thousands—unaudited | March 29, 2003 | March 30, 2002 | ||||||
| Catalog | $ | 33,772 | $ | 37,500 | ||||
| E-commerce | 17,290 | 13,678 | ||||||
| Direct total | 51,062 | 51,178 | ||||||
| Retail | 31,527 | 22,411 | ||||||
| Other | (226 | ) | (232 | ) | ||||
| Net sales | $ | 82,363 | $ | 73,357 | ||||
THE J. JILL GROUP, INC.
DIRECT CONTRIBUTION RECONCILIATION
| | Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| In thousands—unaudited | March 29, 2003 | March 30, 2002 | ||||||
| Direct | $ | 16,046 | $ | 16,414 | ||||
| Retail | (3,174 | ) | (855 | ) | ||||
| Total direct contribution | 12,872 | 15,559 | ||||||
| Unallocated shared-service costs | (6,243 | ) | (6,099 | ) | ||||
| General and administrative expenses | (5,125 | ) | (4,707 | ) | ||||
| Operating income | $ | 1,504 | $ | 4,753 | ||||
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| In thousands—unaudited | March 29, 2003 | Dec. 28, 2002 | |||||
|---|---|---|---|---|---|---|---|
| Assets: | |||||||
| Cash and cash equivalents | $ | 40,622 | $ | 44,734 | |||
| Accounts receivable | 9,556 | 21,317 | |||||
| Inventory | 40,981 | 33,998 | |||||
| Prepaid catalog expenses | 4,859 | 4,082 | |||||
| Deferred income taxes | 6,114 | 6,149 | |||||
| Other current assets | 5,813 | 5,682 | |||||
| Total current assets | 107,945 | 115,962 | |||||
| Property and equipment | 109,785 | 108,676 | |||||
| Other non-current assets | 3,521 | 3,622 | |||||
| Total assets | $ | 221,251 | $ | 228,260 | |||
| Liabilities and stockholders' equity: | |||||||
| Accounts payable and accrued expenses | $ | 32,672 | $ | 40,950 | |||
| Current portion of long-term debt | 1,806 | 1,788 | |||||
| Total current liabilities | 34,478 | 42,738 | |||||
| Long-term debt | 13,345 | 13,802 | |||||
| Deferred credits from landlords | 24,977 | 24,765 | |||||
| Deferred income taxes | 2,118 | 1,856 | |||||
| Total liabilities | 74,918 | 83,161 | |||||
| Capital stock | 107,888 | 107,422 | |||||
| Retained earnings | 38,445 | 37,677 | |||||
| Total liabilities and stockholders' equity | $ | 221,251 | $ | 228,260 | |||
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| In thousands—unaudited | March 29, 2003 | March 30, 2002 | ||||||
| Cash flows provided by operating activities: | ||||||||
| Net income | $ | 768 | $ | 2,696 | ||||
| Depreciation and amortization | 3,780 | 2,783 | ||||||
| Deferred income taxes | 297 | 583 | ||||||
| Changes in assets and liabilities | (2,379 | ) | 1,509 | |||||
| Net cash provided by operating activities | 2,466 | 7,571 | ||||||
Cash flows used in investing activities: | ||||||||
| Additions to property and equipment | (5,822 | ) | (6,212 | ) | ||||
| Investment in trust assets | (597 | ) | (798 | ) | ||||
| Increase in cash held in escrow | (186 | ) | (170 | ) | ||||
| Net cash used in investing activities | (6,605 | ) | (7,180 | ) | ||||
Cash flows provided by financing activities: | ||||||||
| Borrowings under (payments of) debt, net | (439 | ) | (496 | ) | ||||
| Proceeds from stock transactions | 466 | 2,832 | ||||||
| Net cash provided by financing activities | 27 | 2,336 | ||||||
Net increase (decrease) in cash and cash equivalents | (4,112 | ) | 2,727 | |||||
Cash and cash equivalents at: | ||||||||
| Beginning of period | 44,734 | 30,152 | ||||||
| End of period | $ | 40,622 | $ | 32,879 | ||||
THE J. JILL GROUP, INC.
2003 STORE OPENINGS
| | LOCATION | OPENING DATE | ||
|---|---|---|---|---|
| The Galleria | Houston, TX | Mar-03 | ||
| Rosedale Center | Roseville, MN | Apr-03 | ||
| Shoppes @ Grand Prairie | Peoria, IL | Apr-03 | ||
| The Mall in Columbia | Columbia, MD | Apr-03 | ||
| Twelve Oaks | Detroit, MI | Apr-03 |
