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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 SECOND QUARTER RESULTS
Quincy, MA, August 3, 2004—The J. Jill Group, Inc. (Nasdaq: JILL) today reported financial results for the second quarter ended June 26, 2004. Net sales for the second quarter increased by 23.8% to $120.6 million from $97.4 million reported in the prior year. Operating income for the quarter totaled $11.3 million or 9.4% of net sales compared to $10.6 million or 10.9% of net sales in the prior year. The company posted net income for the quarter of $6.5 million or $0.32 per diluted share versus $6.1 million or $0.30 per diluted share in the second quarter of the previous year.
Regarding second quarter sales productivity, direct segment net sales per 1,000 square inches circulated increased by 10% while retail net sales per weighted average square foot increased by 17% as compared to last year. Comparable store sales for stores open at least one full fiscal year increased by 17.8% in the second quarter of 2004 as compared to the second quarter of 2003.
For the six months ended June 26, 2004, the company recorded net sales of $220.5 million compared to $179.7 million in the prior year. Operating income for the six-month period was $15.3 million or 6.9% of net sales compared to $12.1 million or 6.7% of net sales in the prior year. Net income for the six months was $8.8 million or $0.43 per diluted share versus $6.9 million or $0.34 per diluted share in the previous year.
Gordon R. Cooke, President and Chief Executive Officer, commented, "We are very pleased with the financial results achieved during our 2004 spring season. We attribute our spring success to a multitude of factors including our emphasis on color, our multi-channel marketing campaigns, the roll-out of our cross-channel customer database and our enhanced visual in-store presentation, along with some minor adjustments to our merchandise silhouette and fit."
"During the second quarter, our performance in the months of April and May was particularly strong but June was relatively weak, mostly in retail. June and July are typically clearance months and our stores were negatively affected by our lack of clearance inventory. Our June end-of-month inventory balances per store were down by more than 40% compared to the prior year, with clearance inventory per store down by nearly 60%. In August, as we transition to full price fall merchandise, our inventory balances will rebound to normal levels. Nevertheless, our visibility into the third quarter of 2004 and beyond is currently very limited. Accordingly, we are unable to affirm or disavow any future financial targets at this point in time," continued Mr. Cooke.
Mr. Cooke concluded, "Looking ahead, we continue to make great strides in enhancing our customers' shopping experience. The first phase of our internal infrastructure initiatives, which are designed to enable us to improve the way we source, develop, flow and present product as well as the product itself, is now nearly complete. We expect the results of these efforts to become apparent in our retail stores in August and continue to be more evident as the fall season progresses. These changes are critical, and we expect them to result in merchandise assortments that are better in quality and fit, more focused and easier to shop."
The J. Jill Group's conference call to discuss its second quarter earnings will be broadcast live today at 4:30 p.m. Eastern Time at www.jjillgroup.com, and will be archived online within one hour of the completion of the conference call.
The J. Jill Group is a multi-channel specialty retailer of women's apparel, including accessories and footwear. The Company currently markets its products through retail stores, catalogs and its website jjill.com. J. Jill is designed to appeal to active, affluent women age 35 and older.
This press release contains 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: significant changes in customer acceptance of our product offerings; the success or failure of our retail store initiative; our ability to effectively manage our operations and growth in a multi-channel environment; the success of our product development and merchandising initiatives; changes in consumer spending, fashion trends and consumer preferences; the customary risks of purchasing merchandise abroad, including longer lead times, higher initial purchase commitments and foreign currency fluctuations; timeliness of receipts of inventory from vendors; changes in competition in the apparel industry; changes in, or the failure to comply with, federal and state tax and other government regulations; our ability to attract and retain qualified personnel; possible future increases in expenses and labor and employee benefit costs; 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 for the fiscal year ended December 27, 2003. J. Jill disclaims any intent or obligation to update any forward-looking statements.
(tables to follow)
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| | Three Months Ended
| | Six Months Ended
|
|---|
In thousands, except per share data—unaudited
| | June 26, 2004
| | June 28, 2003
| | June 26, 2004
| | June 28, 2003
|
|---|
| Net sales | | $ | 120,561 | | $ | 97,365 | | $ | 220,490 | | $ | 179,728 |
| Cost of products and merchandising | | | 73,396 | | | 60,744 | | | 138,241 | | | 117,552 |
|
| | Gross margin | | | 47,165 | | | 36,621 | | | 82,249 | | | 62,176 |
| Selling, general and administrative expenses | | | 35,822 | | | 26,030 | | | 66,993 | | | 50,081 |
|
| | Operating income | | | 11,343 | | | 10,591 | | | 15,256 | | | 12,095 |
| Interest, net | | | 96 | | | 167 | | | 238 | | | 363 |
| Income tax provision | | | 4,722 | | | 4,326 | | | 6,268 | | | 4,866 |
|
| | Net income | | $ | 6,525 | | $ | 6,098 | | $ | 8,750 | | $ | 6,866 |
|
| Earnings per share: | | | | | | | | | | | | |
| | Basic | | $ | 0.33 | | $ | 0.31 | | $ | 0.44 | | $ | 0.35 |
| | Diluted | | $ | 0.32 | | $ | 0.30 | | $ | 0.43 | | $ | 0.34 |
|
| Weighted average shares outstanding: | | | | | | | | | | | | |
| | Basic | | | 20,044 | | | 19,575 | | | 19,933 | | | 19,571 |
| | Diluted | | | 20,705 | | | 20,100 | | | 20,509 | | | 20,044 |
|
THE J. JILL GROUP, INC.
NET SALES SUMMARY
| | Three Months Ended
| | Six Months Ended
|
|---|
In thousands—unaudited
| | June 26, 2004
| | June 28, 2003
| | June 26, 2004
| | June 28, 2003
|
|---|
| Catalog | | $ | 32,191 | | $ | 35,061 | | $ | 61,806 | | $ | 67,837 |
| Internet | | | 22,066 | | | 18,279 | | | 41,206 | | | 35,569 |
|
| | Direct total | | | 54,257 | | | 53,340 | | | 103,012 | | | 103,406 |
| Retail | | | 65,134 | | | 42,910 | | | 115,357 | | | 74,286 |
| Other | | | 1,170 | | | 1,115 | | | 2,121 | | | 2,036 |
|
| | Net sales | | $ | 120,561 | | $ | 97,365 | | $ | 220,490 | | $ | 179,728 |
|
THE J. JILL GROUP, INC.
OPERATING INCOME RECONCILIATION
| | Three Months Ended
| | Six Months Ended
| |
|---|
In thousands—unaudited
| | June 26, 2004
| | June 28, 2003
| | June 26, 2004
| | June 28, 2003
| |
|---|
| Direct segment contribution | | $ | 14,947 | | $ | 14,894 | | $ | 27,893 | | $ | 29,185 | |
| Retail segment contribution | | | 9,862 | | | 4,621 | | | 12,829 | | | 1,265 | |
| Other | | | (5,024 | ) | | (3,728 | ) | | (9,855 | ) | | (8,034 | ) |
| General and administrative expenses | | | (8,442 | ) | | (5,196 | ) | | (15,611 | ) | | (10,321 | ) |
| |
| | Operating income | | $ | 11,343 | | $ | 10,591 | | $ | 15,256 | | $ | 12,095 | |
| |
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands—unaudited
| | June 26, 2004
| | June 28, 2003
| | Dec. 27, 2003
|
|---|
| Assets: | | | | | | | | | |
| Cash and cash equivalents | | $ | 81,986 | | $ | 55,194 | | $ | 59,287 |
| Accounts receivable, net | | | 16,359 | | | 11,483 | | | 18,634 |
| Inventory | | | 27,034 | | | 34,699 | | | 28,131 |
| Prepaid catalog expenses | | | 4,049 | | | 4,650 | | | 4,106 |
| Deferred income taxes | | | 6,878 | | | 6,331 | | | 7,041 |
| Other current assets | | | 7,781 | | | 7,574 | | | 7,555 |
|
| | Total current assets | | | 144,087 | | | 119,931 | | | 124,754 |
|
| Property and equipment, net | | | 126,145 | | | 113,401 | | | 125,316 |
| Other non-current assets | | | 4,665 | | | 3,781 | | | 3,900 |
|
| | Total assets | | $ | 274,897 | | $ | 237,113 | | $ | 253,970 |
|
| Liabilities and stockholders' equity: | | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 51,518 | | $ | 39,609 | | $ | 45,102 |
| Current portion of long-term debt | | | 1,755 | | | 1,678 | | | 1,706 |
|
| | Total current liabilities | | | 53,273 | | | 41,287 | | | 46,808 |
|
| Long-term debt, less current portion | | | 11,345 | | | 13,100 | | | 12,236 |
| Deferred credits from landlords and other | | | 39,040 | | | 27,549 | | | 37,540 |
| Deferred income taxes | | | 5,032 | | | 2,746 | | | 4,168 |
|
| | Total liabilities | | | 108,690 | | | 84,682 | | | 100,752 |
|
| Capital stock | | | 112,587 | | | 107,888 | | | 108,348 |
| Retained earnings | | | 53,620 | | | 44,543 | | | 44,870 |
|
| | Total liabilities and stockholders' equity | | $ | 274,897 | | $ | 237,113 | | $ | 253,970 |
|
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands—unaudited
| | June 26, 2004
| | June 28, 2003
| |
|---|
| Cash flows provided by operating activities: | | | | | | | |
| | Net income | | $ | 8,750 | | $ | 6,866 | |
| | Depreciation and amortization | | | 8,915 | | | 7,629 | |
| | Gain on trust assets | | | (53 | ) | | (171 | ) |
| | Deferred income taxes | | | 1,027 | | | 708 | |
| | Changes in assets and liabilities | | | 12,773 | | | 9,443 | |
| |
| Net cash provided by operating activities | | | 31,412 | | | 24,475 | |
Cash flows used in investing activities: |
|
|
|
|
|
|
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| | Additions to property and equipment | | | (9,745 | ) | | (12,509 | ) |
| | Investment in trust assets | | | (816 | ) | | (700 | ) |
| | Increase in cash held in escrow | | | (390 | ) | | (460 | ) |
| |
| Net cash used in investing activities | | | (10,951 | ) | | (13,669 | ) |
Cash flows provided by (used in) financing activities: |
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|
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| | Payments of debt borrowings | | | (842 | ) | | (812 | ) |
| | Proceeds from stock transactions | | | 3,080 | | | 466 | |
| |
| Net cash provided by (used in) financing activities | | | 2,238 | | | (346 | ) |
Net increase in cash and cash equivalents |
|
|
22,699 |
|
|
10,460 |
|
Cash and cash equivalents at: |
|
|
|
|
|
|
|
| | Beginning of period | | | 59,287 | | | 44,734 | |
| |
| | End of period | | $ | 81,986 | | $ | 55,194 | |
| |
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THE J. JILL GROUP REPORTS SECOND QUARTER RESULTS
