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 |
|
|
|
| (203) 222-9013 |
THE J. JILL GROUP REPORTS FOURTH QUARTER AND FISCAL YEAR RESULTS
Quincy, MA, February 9, 2004 – The J. Jill Group, Inc. (Nasdaq: JILL) today reported financial results for the fourth quarter and fiscal year ended December 27, 2003. Net sales for the fourth quarter increased by 6.5% to $114.9 million from $107.9 million reported in the prior year. Operating income for the quarter totaled $5.6 million, or 4.9% of net sales, compared to $10.8 million, or 10.0% of net sales, in the prior year. The company posted net income of $3.2 million, or $0.16 per diluted share, for the fourth quarter this year versus net income of $6.2 million, or $0.30 per diluted share, in the fourth quarter of the previous year. Fourth quarter sales productivity in the direct segment, as measured by demand per 1,000 square inches circulated, was comparable to the prior year as was the retail segment sales per square foot.
For the fiscal year ended December 27, 2003 the company recorded net sales of $376.9 million, representing an increase of 8.4% over fiscal 2002 net sales of $347.6 million. Operating income for the fiscal year was $12.9 million, or 3.4% of net sales, compared to $32.8 million, or 9.4% of net sales, in the prior year. Net income for the twelve months was $7.2 million, or $0.36 per diluted share, versus $18.9 million, or $0.94 per diluted share, in the previous year. Fiscal year sales productivity in the direct segment and the retail segment declined by 10% and 5%, respectively, when compared to the prior year.
Gordon R. Cooke, President and Chief Executive Officer, commented, “Our year ended on a positive note primarily due to strong Holiday results which enabled us to exceed our previously issued targets for the fourth quarter. Nevertheless, fiscal 2003 was a difficult year and marked the beginning of an important transition for The J. Jill Group. In the early part of the year we concluded that the growth of our retail business was creating significant complexities as a result of our private label, multi-channel business model. We determined that the front-end product development and merchandising infrastructure that had historically worked well in our catalog business was inadequate when it came to supporting a more complex multi-channel business. Consequently, we committed to make significant investments in both personnel and systems to re-engineer and upgrade our operating infrastructure and processes in design, product management, sourcing, product integrity, technical design and merchandising. We believe that these investments will allow us to fundamentally change the way we source and develop product, how we flow product, how we present product and the product itself.”
“Throughout fiscal 2003 we worked to redefine our strategic objectives in the supply chain area and we began implementing the beginnings of a new front-end product development and merchandising infrastructure. During the latter half of the year we reorganized our entire product area under the leadership of Steve Pearson, our newly hired EVP of Merchandising and Product Development. We believe that Steve, a specialty retail veteran with more than 20 years of experience with The Gap/Banana Republic, is the right person to spearhead this project. Additionally, I am happy to report that to date we have filled or are close to filling all of our identified critical positions within Steve’s area,” continued Mr. Cooke.
-more-
Regarding fiscal 2004, the company affirms its previously issued targets. Those targets called for first quarter sales to be between $87.0 and $92.0 million with an expected loss per share in the range of $0.15 to $0.20. For fiscal 2004 the sales are targeted to be between $415.0 and $420.0 million and earnings per diluted share are targeted to range from $0.30 to $0.35.
The sales and earnings targets contained in this release are not guarantees of actual performance. Historically, J. Jill’s performance has deviated, often materially, from its targets. These statements do not include the potential of any business risks, opportunities or developments that may occur after February 9, 2004. J. Jill does not expect to report on its progress during the quarter, or to comment on it to analysts or investors, until after the quarter has ended.
Mr. Cooke concluded, “Although we believe we are well on our way toward our goal of building a world-class product development and merchandising organization, our long lead times mean that most of the changes we are working on will not be evident in our merchandise assortment until late in fiscal 2004. Consequently, our strategies for fiscal 2004 are to maintain fiscal 2003 profitability per share while we absorb the increased infrastructure investments and at the same time continue to strengthen our balance sheet.”
The J. Jill Group’s conference call to discuss its fourth quarter and fiscal year 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 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)
2
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
| Three Months Ended |
| Twelve Months Ended |
| ||||||||
In thousands, except per share data — unaudited |
| Dec. 27, |
| Dec. 28, |
| Dec. 27, |
| Dec. 28, |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
| $ | 114,851 |
| $ | 107,850 |
| $ | 376,904 |
| $ | 347,574 |
|
Cost of products and merchandising |
| 74,355 |
| 66,655 |
| 249,865 |
| 215,250 |
| ||||
Gross margin |
| 40,496 |
| 41,195 |
| 127,039 |
| 132,324 |
| ||||
Selling, general and administrative expenses |
| 34,918 |
| 30,394 |
| 114,112 |
| 99,562 |
| ||||
Operating income |
| 5,578 |
| 10,801 |
| 12,927 |
| 32,762 |
| ||||
Interest, net |
| 193 |
| 218 |
| 739 |
| 769 |
| ||||
Income tax provision |
| 2,207 |
| 4,405 |
| 4,995 |
| 13,083 |
| ||||
Net income |
| $ | 3,178 |
| $ | 6,178 |
| $ | 7,193 |
| $ | 18,910 |
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.16 |
| $ | 0.32 |
| $ | 0.37 |
| $ | 0.99 |
|
Diluted |
| $ | 0.16 |
| $ | 0.30 |
| $ | 0.36 |
| $ | 0.94 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 19,622 |
| 19,488 |
| 19,585 |
| 19,080 |
| ||||
Diluted |
| 20,032 |
| 20,279 |
| 20,060 |
| 20,096 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
THE J. JILL GROUP, INC. |
|
|
|
|
|
|
|
|
| ||||
NET SALES SUMMARY |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
|
| Three Months Ended |
| Twelve Months Ended |
| ||||||||
In thousands — unaudited |
| Dec. 27, |
| Dec. 28, |
| Dec. 27, |
| Dec. 28, |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Catalog |
| $ | 33,636 |
| $ | 42,457 |
| $ | 131,180 |
| $ | 154,486 |
|
E-commerce |
| 19,251 |
| 20,540 |
| 69,039 |
| 66,109 |
| ||||
Direct total |
| 52,887 |
| 62,997 |
| 200,219 |
| 220,595 |
| ||||
Retail |
| 62,194 |
| 45,238 |
| 177,511 |
| 128,086 |
| ||||
Other |
| (230 | ) | (385 | ) | (826 | ) | (1,107 | ) | ||||
Net sales |
| $ | 114,851 |
| $ | 107,850 |
| $ | 376,904 |
| $ | 347,574 |
|
|
|
|
|
|
|
|
|
|
| ||||
THE J. JILL GROUP, INC. |
|
|
|
|
|
|
|
|
| ||||
DIRECT CONTRIBUTION RECONCILIATION |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
|
| Three Months Ended |
| Twelve Months Ended |
| ||||||||
In thousands — unaudited |
| Dec. 27, |
| Dec. 28, |
| Dec. 27, |
| Dec. 28, |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Direct |
| $ | 11,983 |
| $ | 17,446 |
| $ | 54,553 |
| $ | 69,758 |
|
Retail |
| 7,189 |
| 4,444 |
| 7,143 |
| 9,997 |
| ||||
Total direct contribution |
| 19,172 |
| 21,890 |
| 61,696 |
| 79,755 |
| ||||
Unallocated shared-service costs |
| (7,622 | ) | (6,675 | ) | (26,242 | ) | (24,856 | ) | ||||
General and administrative expenses |
| (5,972 | ) | (4,414 | ) | (22,527 | ) | (22,137 | ) | ||||
Operating income |
| $ | 5,578 |
| $ | 10,801 |
| $ | 12,927 |
| $ | 32,762 |
|
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands — unaudited |
| Dec. 27, |
| Dec. 28, |
| ||
|
|
|
|
|
| ||
Assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 59,287 |
| $ | 44,734 |
|
Accounts receivable, net |
| 18,634 |
| 21,317 |
| ||
Inventory |
| 28,131 |
| 33,998 |
| ||
Prepaid catalog expenses |
| 4,106 |
| 4,082 |
| ||
Deferred income taxes |
| 7,041 |
| 6,149 |
| ||
Other current assets |
| 7,555 |
| 5,682 |
| ||
Total current assets |
| 124,754 |
| 115,962 |
| ||
Property and equipment, net |
| 125,316 |
| 108,676 |
| ||
Other non-current assets |
| 3,900 |
| 3,622 |
| ||
Total assets |
| $ | 253,970 |
| $ | 228,260 |
|
|
|
|
|
|
| ||
Liabilities and stockholders’ equity: |
|
|
|
|
| ||
Accounts payable and accrued expenses |
| $ | 45,102 |
| $ | 40,950 |
|
Current portion of long-term debt |
| 1,706 |
| 1,788 |
| ||
Total current liabilities |
| 46,808 |
| 42,738 |
| ||
Long-term debt, less current portion |
| 12,236 |
| 13,802 |
| ||
Deferred credits from landlords and other |
| 37,540 |
| 24,765 |
| ||
Deferred income taxes |
| 4,168 |
| 1,856 |
| ||
Total liabilities |
| 100,752 |
| 83,161 |
| ||
Capital stock |
| 108,348 |
| 107,422 |
| ||
Retained earnings |
| 44,870 |
| 37,677 |
| ||
Total liabilities and stockholders’ equity |
| $ | 253,970 |
| $ | 228,260 |
|
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| Twelve Months Ended |
| ||||
In thousands — unaudited |
| Dec. 27, |
| Dec. 28, |
| ||
|
|
|
|
|
| ||
Cash flows provided by operating activities: |
|
|
|
|
| ||
Net income |
| $ | 7,193 |
| $ | 18,910 |
|
Depreciation and amortization |
| 16,131 |
| 12,672 |
| ||
(Gain) loss on trust assets |
| (374 | ) | 104 |
| ||
Asset impairment |
| — |
| 847 |
| ||
Deferred income taxes |
| 1,420 |
| 3,375 |
| ||
Changes in assets and liabilities |
| 26,369 |
| 9,817 |
| ||
Net cash provided by operating activities |
| 50,739 |
| 45,725 |
| ||
|
|
|
|
|
| ||
Cash flows used in investing activities: |
|
|
|
|
| ||
Additions to property and equipment |
| (34,265 | ) | (34,734 | ) | ||
Investment in trust assets |
| (898 | ) | (2,414 | ) | ||
Increase in cash held in escrow |
| (245 | ) | (40 | ) | ||
Net cash used in investing activities |
| (35,408 | ) | (37,188 | ) | ||
|
|
|
|
|
| ||
Cash flows (used in) provided by financing activities: |
|
|
|
|
| ||
Borrowings under (payments of) debt, net |
| (1,648 | ) | (1,755 | ) | ||
Proceeds from stock transactions |
| 870 |
| 7,800 |
| ||
Net cash (used in) provided by financing activities |
| (778 | ) | 6,045 |
| ||
|
|
|
|
|
| ||
Net increase in cash and cash equivalents |
| 14,553 |
| 14,582 |
| ||
|
|
|
|
|
| ||
Cash and cash equivalents at: |
|
|
|
|
| ||
Beginning of period |
| 44,734 |
| 30,152 |
| ||
End of period |
| $ | 59,287 |
| $ | 44,734 |
|
THE J. JILL GROUP, INC.
2003 STORE OPENINGS |
| LOCATION |
| OPENING |
|
|
|
|
|
|
|
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 |
|
Stonestown Galleria |
| San Francisco, CA |
| May-03 |
|
Towson Town Center |
| Towson, MD |
| May-03 |
|
Stamford Town Center |
| Stamford, CT |
| Jun-03 |
|
Providence Place (Petites expansion) |
| Providence, RI |
| Jul-03 |
|
Mall at Green Hills |
| Nashville, TN |
| Jul-03 |
|
Montgomery Village |
| Santa Rosa, CA |
| Jul-03 |
|
The Shops at Boardwalk |
| Kansas City, MO |
| Jul-03 |
|
Northshore Mall |
| Peabody, MA |
| Aug-03 |
|
Barton Creek Square |
| Austin, TX |
| Aug-03 |
|
Shoppes at Briargate |
| Colorado Springs, CO |
| Aug-03 |
|
River Oaks |
| Houston, TX |
| Sep-03 |
|
Memorial City |
| Houston, TX |
| Sep-03 |
|
Short Pump Town Center |
| Richmond, VA |
| Sep-03 |
|
The Shoppes at Arbor Lakes |
| Minneapolis, MN |
| Sep-03 |
|
Stony Point |
| Richmond, VA |
| Sep-03 |
|
Main Street Promenade |
| Naperville, IL |
| Sep-03 |
|
La Cumbre Plaza |
| Santa Barbara, CA |
| Sep-03 |
|
Greenway Station |
| Madison, WI |
| Sep-03 |
|
One Pacific Place |
| Omaha, NE |
| Sep-03 |
|
Shoppes @ English Village |
| Montgomeryville, PA |
| Oct-03 |
|
North Park Mall |
| Davenport, IA |
| Oct-03 |
|
Orland Square |
| Chicago, IL |
| Oct-03 |
|
Valencia Town Center |
| Valencia, CA |
| Oct-03 |
|
The Gardens |
| West Palm Beach, FL |
| Oct-03 |
|
Fashion Center @ Pentagon City |
| Arlington, VA |
| Oct-03 |
|
Eastview Mall |
| Rochester, NY |
| Nov-03 |
|
The Grove at Shrewsbury |
| Shrewsbury, NJ |
| Nov-03 |
|
Garden City Center |
| Cranston, RI |
| Nov-03 |
|
Forum at Carlsbad |
| Carlsbad, CA |
| Nov-03 |
|
Streets of West Chester |
| Cincinnati, OH |
| Nov-03 |
|
