JILL - Earnings call transcript Q1 2018

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Operator

Good morning. My name is Lisa and I’ll be your conference operator today. At this time, I would like to welcome everyone to the J. Jill First Quarter 2018 Conference Call. On today’s call are Linda Heasley, CEO of J. Biese, President Dave and Chief and Officer. Operating Inc.; Executive and Vice Financial Jill been mute placed background have lines All on noise. to any prevent After a there remarks, session. the will speakers’ question-and-answer be that I constitute the may statements Private provisions Act meaning and to Reform to begin, of this pursuant forward-looking we of made Securities amended. within Before made during Litigation Instructions] remind [Operator XXXX of you and certain are the comments call Harbor need as the Safe known and materially Such risks are forward-looking to both actual differ statements that uncertainties to cause from unknown could subject and statements. results such and the J. are risks Those uncertainties described press release in and filing. SECs Jill’s The forward-looking this undertake of do statements date not today made any obligation of our the and update we as call to are statements. forward-looking

to this adjusted measures today. the certain financial available measures showing schedule issued refer call. reconciliation versus our non-GAAP on non-GAAP GAAP financial in is or we Finally, release A press may

of Investor have If of now you the visiting I Linda. call jjill.com. copy you turn may not by will the today’s over do Relations website press at to one release, a our page obtain

Linda Heasley

morning as will her good the as Bennett I of to and I and joining I you provide as a but am our brand first customer. speaking a Jill wanted why to be in I my to since Paula time am to honored the phase context little dedication J. thank ago. initial for I’m member a who today through Board as with admired and retailer, I you J. Thank have to to on growth. and this provide Jill women’s’ my and Jill weeks woman, be eight moment, The a excited and opportunities. also as a J. walk Board its the insight of fellow CEO L. next can long know Jill here the segment to you strength Dave call of has here. been everyone. outlook an I and quarter have at a this is to member Bryant, why of built before previously as deep CEO J. understanding past that of I a Lane of Because understanding and and the Directors, foundation in Company the decade a I the its where of Ham held have tough brand apparel we leadership business, Ascena’s Jill The prior CVS. retail have of I know I to consumer the Bryant I Honey Limited, as over and company’s Baked J. having been successful she served and has that and retail and improve. positions bring

think years. tremendous growth opportunity for I is in there coming the

are retail improved results continued from ourselves, e-commerce and indicative channels. where we our of from stores quarter first saw we The our strength find results

also growth attract are the loyalty in customers speaks customer the existing to retain which to seeing ability We as to the of brand. of as momentum our our well customers quarter, file new this and our

should we to to performance know We get have level us a that delivering. be work of do, to we more

Jill. As marks I at week week mentioned, this J. eight my

have As with time been you would I expect, teams. spending our significant

base, We our and it’s to us unique our I’m looking we while have potential. I’m the customers is is sufficient. the while across unlock concurrently women with more base. our connection necessary aspect find which to of existing is have our to have business strengthening embrace areas to connection it and for a and customer our be can customer and accessing today, platforms in every been currently opportunity deep than our a admirable have for we we with important not solid that There alone more

what investments some in lies am by growth. our excited to accelerate have I make to changes ahead. We

our and review Now quarter outlook. I will Dave? results first turn to to it Dave over

Dave Biese

you Thank Linda.

our was fourth to deceleration in our not anticipated. driven the sales expected, demand forward we weaker The by degree quarter quarter from As pulled February. originally but promotions our decelerated largely the January quarter, from trend fourth February the first performance, as

as we had through and moved a the finish the expected trends improved stronger Our quarter we for than period.

continues our channels Our sales both results, star yet exceeded performance to drive expectations.

quarter, e-commerce our During the shopping upgrades teams that the the improved in channel. implemented experience

I our we progress demand our as are detail, housekeeping. continue track further better results clear to will now the well inventory to fitting to payment account and features and as inventory the rollout more fall review Further, including align to offering fall. We to will our on meet financial some and level made by customer development positive objective website to my in enhanced of alternative to in options. the mix first

XXXX a do reminder, to a we back the shift. week XX year is impact an from related As experience and calendar

our XXXX As restated of NRF’s and reporting apples-to-apples on standard, it of relates not sales, comparable recognition to to historical use impact are performance. sales revenue the adopted we others, have our comparable such, does more Unlike we calendar results. the have view result growth, new our however as accounting not this our material providing reporting a we a calculate adjusting

quarter, increased stores quarter. sales than last expected better the sales of total net versus were driven the selling $XXX.X comparable For increase product years’ our X.X%, $XXX.X an Total of sales million. million, company and X.X% in by

the week I larger This much May. benefitted of in sales our week volume earlier, being guidance. quarter result our by noted February quarter a in calendar a was contemplated first low from As a replaced first from shift volume

shift, are while been $XXX.X and IPO The rate they year, products. was line non-recurring this and historical related to profit $XXX.X between XXXX. million last in to million given our year sales XX.X%. spread slightly $XX.X year’s Excluding prior year expenses was excluding certain than Gross results. this related versus XX.X% million compared total to respectively. were expenses more have CEO was year, margin last SG&A million Non-recurring the guidance, cost better-than-expected in transition, and March sale one-time million of $XX.X million company were the sales of gross comparable last with reduction selling and our versus $X.X our $X.X the total net more last would

a of operating of $XX.X income or income year. the million or was Operating percentage year. SG&A or last the of million sales driven $XX.X impact sales, quarter EBITDA one-time non-recurring sales The $XX.X to the GAAP for was expenses shift was for sales as growth. leverage million and by XX.X% XXXX. of $XX the calendar sales quarter of last first net as was comparable of $XX sales. non-recurring million As million XX% was excluding XX.X% compared expense versus SG&A XX.X% Adjusted total XX.X% our as well excluding expenses versus

for per rate. diluted expense percentage reconciliation share, or $XX.X federal reduced $X.X sales, the per was $X.X XX.X% or of rate GAAP diluted significantly As of income last $X net $X.XX in press XX.X% EBITDA is XX.X% quarter a versus versus million was in million income release. was adjusted was first Interest tax as versus year. and compared our million EBITDA-to-net quarter for income A Tax million interest year, offset year. the tax $X.X of rates partially Act this was quarter the million by $X.XX the Cuts pre-payments noted for And reflecting was the XX.X% made last last fiscal voluntary period higher versus $X benefit the this effective in our the and and expense included our XXXX. in US share XXXX call, Jobs million to year. Tax last

The first shift from a benefit lower included rate. $X.XX and from a calendar XXXX quarter benefit $X.XX the tax the

share $XX.X share non-recurring million versus year. in XXXX adjusted or Finally, million or XX% uses per tax $X.XX was fiscal net expenses earnings diluted respectively. XX% income per share rate last and diluted diluted XXXX and which $XX.X $X.XX per excludes assumptions Adjusted

quarter million facility. cash million Turning in availability $XX.X our the revolving and to with sheet, under ended balance we credit in $XX.X the

quarter at end of in inventory end $XX.X Our of at was compared the the quarter XXXX. $XX.X million the the million to first

stores and with During the we stores. XXX the closed quarter, quarter ended three

Finally, were million. expenditures capital $X.X

Turning the adjustments now we year diagnose out, guidance are us quarter outlook; the make our flexibility trends our call, one noted and continue to as providing the to progresses. our giving to business as to in previous

the expect sales positive of be to XXXX, to total we For X%. quarter second comparable flat

low had The XXXX calendar the We the due in single-digits is the second quarter. quarter first expect headwind as shifted to net shift a we in a calendar. sales to sales the decrease total benefit to result of

Our expect coupled track season. puts efforts for we inventory result in points basis align clearance margin efforts gross better customer to demand a reduction as clearance will the fall on decline and second second the continue quarter and inventory to half XXX These us continued approximately the in with with year-over-year. receipts our

This for a $X.XX, Adjusted non-recurring quarter Also diluted in flat Diluted and approximately due for calendar the of a XXXX. a rate to expect to We basis to result shift. the the as of which expected negative a the year’s from compares the calendar approximately lower share from company’s higher points to from the close prepayments stores for with open to deleverage to and sales stores. end the earnings to related of impact last $X.XX IPO. expenses primarily XXX share second we $X.XX the quarter XXX were Interest related SG&A fiscal tax offset per including $X.XX shift. a $X.XX three of will sales year, headwind $X.XX, quarter range to be second expect as quarter negative in XXXX impact by the two a be as the the of last excluded and quarter, percentage per earnings benefit to $X.XX is benefit to rates. second

now continue of the to And new stores. For year to questions. million. the full million year of range in XXXX, operator with expect XX we expect to I for to stores to to that, be open capital will to And $XX expect close back seven eight the call the take finally, turn expenditures and to $XX the we

Operator

our first the from from America. question of of Hutchinson Instructions] [Operator Bank And Lorraine line comes

open. is line Your

Lorraine Hutchinson

think update e-commerce, in of re-platforming, I was when and where you are offering on as an hoping want throughout for on complete terms you website have the you the you year? do capabilities the just it will the

Dave Biese

Lorraine Hi, Dave. it’s

site backtrack the in at year. of site of say opportunities to experience. a this the of bit I’d fiscal improve a little something the you beginning to terms or we if more less discussed the foundational we saw history We then implemented So, it, new was that where more to

of that inventory a inventory particularly the just adoption. talked some mix had We impact more to and was of some position then general And challenges there we the about this or presented the also site. that of the less that

made So of as feel now, I some here right against all we’ve good progress sit like we that.

You over that we continue period more the that of time for that think but say some anecdotally time, would to we’ll improves. acclimated; we’d customer expect becomes go

merchandize out the the mix opportunity clearing progress but time just of inventory, up the at cleaning there there. of a against improve I not still can the bit site overall that terms inventory such In is same made level, think the good little we we’ve but better, also to

of good front, fixed feel you I foundational, more it we’ve to that. against that, the progress if some the want On like things made call

We’re terms less significant into some of advance to point to would at that some because holiday. to we my obviously fit, don’t stuff say that making completed then category say that options additional payment foundational going be becomes this than the that against will well the fall noted of continue other it, that, but exact in spot we’re which fall. progress I have an some on going I account do some this features, we’re falls in of experience, and

forward holiday now. to say We platform I a the across to would in way in and I more more going good look website. to that from we’re to really business it about our it the digital the year, it though, we basis good time a really leveraging say there So and progress as look would in right this go feeling we fulsome feel a making by using about future. we

progress, about we’re front we the in excited the this put we made feeling to fall more we’re we’ve customer. something about adopted been readily, it’s like gotten feel So will but good that where real have it’s a place of we upside, and

Operator

comes question Randy of from next the Our Konik line from Jefferies.

open. is line Your

Randy Konik

changing and expand some like switched for that, Are curious. improvement. any of those could initial what you areas your you do about of or areas - if to just see of wonder impressions on want needing where your around areas something be just to two or you I time improvement just or procedures your additional see process particular one there

Linda Heasley

of been I’ve lot Randy, much here. with you imagine you spending great Thank here the since people to and brand a be time as can, Spent it’s lot its spending I’m I to a been in weeks and and in meetings, been about as learning privilege as I’ve most I’ve of lot team, eight of teams, leadership, I’ve the getting field been can still sessions, leadership our I’ve in time one-on-one assessing. of our a the the stores, of had meet

intent forward. the some near my move come of with be will to There’s well as as and short an it in the still back more been neck a around much you tell Thank be to brand framework So articulated than the I and can. I but as very wrong has in able its as to very I’m exciting, about lot decisions right the will my people deep future assessment learning you. which

Randy Konik

the it like not stores change just channel then business. think quarters Dave of of or can the the three out, on in we procedures going like us us of it’s like clearing procedures, when just just they normalization have in we forward? a versus past act trying reported channel did you do in stores. clearing like how sort the the of e-com process, clearing out, the the back through curious any, in last will on it then the e-com if the change they – on is more together? sense inventory Give and change in stores inventory do perspective to a position, And the I changed or can you get seems And when quarter the two period decent Is a get perspective website most quarters a clearing timeline some you you to think some the if think with give

Dave Biese

your Well, it I’ll use as shape, inventory, generally decent to right word, relates now.

size more plans, appealing demand and on by get We’re which the right our to this the the to to for track certainly again was fall. level and customer mix absolute more

about feel that. we So good

finished basis inventory year quarter out X. on on about of year-over-year. a plus X% We a last just shift we are adjusted came plus about We

fall. So we go we’re as into we progress than making that the will and be better

I’m So feeling that. good about

the As to continue I will point, same use, process and be same this we the forward far the future. that it the say is at going for as would process foreseeable process

a business it promotional we is the on talking some know that future, some now, we be clear we’re price going for we you right way use, to works to the are from the but could to conversations relying about more, that channels the for model which that of part think But except too would it’s a are things think well improve which we future. our foreseeable is now I as heavily pretty the direct We say correct. in which large product more is what of trying same

and on don’t in way, that a far I As operating yet. frankly, e-com view have as getting same the point of retail

and business so of precisely the adjustments a have continue One the guiding we’re future. those is view quarter reasons reason can out that understand better for that to our one well, we of make very

appreciate being we’re to one out, patience that. to is, continue future I all talk though able about we on your fulsome would much more do the look quarter very of we that forward and about So, what to say that,

Randy Konik

And little one follow-up, more helpful. that’s really

stability thinking how visibility visibility to you’re in of terms variability the let’s a little like quarter and does just feel in getting more couple now financial in business, of and a you’re business and starting quarters bit that’s right versus it a ago, curious. Just return or say about the

Dave Biese

hindsight improved a would obviously trying back promotion continue will to to With we stable the also our more on guidance the rate first of that contemplative least say, that I hit pulled reflects was is we’ve because January February run time point, as through quarter, third a really at how rate much basis so given this given second the now. yes. of be yet. business business reflect quarter, lot our some would and else as and and quarter, of the on from because in until I there’s the forward is what inventories and in our is, passage way learn our now now, well When that of reinforce I got and say learning state will more there from run not a though of operating at terms to I communicated kind would say, there, what is What promote we I

Operator

from comes Paul line question Deutsche Trussell of next the from Our Bank.

Your line is open.

Unidentified Analyst

direct? seeing quarter of maybe you This just Paul you growth, is for some the what work AURs, around that the in driven what actions the channel little versus will about if could positive the And trends bit and you by of the back Christina during Katayan on comps some Trussell. and during both like took you was store the I were begin get store if learnings? the comp wondering and that side were a further the are you transactions talk could to to the quarter

Dave Biese

quarter our that lot I do benefit. the I the different it and and and April, of offer of for we traffic of as results of through improved one its and and is we to that, conversion outside were obviously we and we so something our feel believe quarter. receptivity both March for product as that in channels frankly positive improvement some a that in move far Both the is as merchandizing what to nice late saw simply has would like we say think And expectations as channels. is a provided has and the stories reflective things and the improved ended both how positive a

say, to stores I been a for solid would relates stores, while. it have the pretty As the

more on in strength like focused something We obviously we quarter. now. I’ll focus strong and a the strength very positive for of feel way. in a of retail the all to you’re again of felt oppose turn the had reasons foundational and there right first about to we businesses two we traffic gaining if and channels doing some we conversion Direct the was some the like also feel represented quarter. math a confidence percentage talked on that they needed what’s dramatic that’s But really So that there had having say in the as based

Unidentified Analyst

for on be and still follow-up XQ meaningfully. a down be gross expectations just the to is would And margin

versus how wondering, just from inventory So is carryover XQ inventory? of XQ much the fresh

Dave Biese

exactly nature or I the how don’t on it’s and how have prospective share to flows. operates our a much, necessarily a number business of

over to do product it’s how just and You that likes. the with carries a always lot have architect and assortment some the we

a isn’t precise there So that. answer to

left the In terms bucket though ourselves first in it’s of on, in sequentially really than less. we place is margin we in the quarter, the allowance there. also by see the good that the we the sold that that have the absolutely quarter to in an but we’ve decline The year-over-year of have down a on the that off-price in move inventory progress like made inventory we second good we had that expected in fact that We’ve influenced inventory felt first that we [fodder] better through our reason and half. margin margin to need to

Operator

Our next Wells from of Boruchow Ike from line the question comes Fargo.

Your is open. line

Unidentified Analyst

QX you bit quarter give you [Nancy] cadence that like ended and on how saw throughout just just in the Ike. than obviously the to more quarterly that you where quarter-to-date for off. QX you us lot Can looking? you is think started about talk a is getting a This stronger detail about maybe little Could actually

Dave Biese

Yes.

strong. when March set and So just a about backtracking two and bit as to and Easter we is, that challenge stage and then shift, we nicely, a through the April you what the you it ultimately February talked had was moved the were together March March of really quarter. know, we improved first middle was little we they of very months guided April, better the take much expected. to together was end Because but if than the of

really with But April pleased and I strength. was particularly in that beast. drove say So would that the thing we’re our very the stores

quarterly a So quarter X% and lot to comp. where of finished we influence results after a that. at stand guided X.X% May obviously on has we the just We’ve X%

see deceleration rate think seen a in cautious operating guidance. so we a business again, of our further we by going yet I’ll terms are terms here we’re time having more confident I state we of and far of say, it that seen in the right As deceleration necessarily informed haven’t to again in run in of been obviously a ultimately now means, say be out. steady have where we before, a But May, talking a would in period in in we’ve any I May, but not

Unidentified Analyst

as follow-up, is shifts to are weekend expenses calendar are there And that is sort QX, then from shifting consider, then other to just an QX? of And anything there should a you the could tell or QX QX? obviously just just us we that but any any XXrd in SG&A offset

Dave Biese

the similar going deal be one of here to that don’t of quarter fourth Well in as again not as shift, I – an first we’re the see is from shift we as SG&A like to concerned, it’s And or and the to shift business expense quarter. third another, second will seeing that rate to shift change quarters, necessarily. quarter, given of a necessarily the SG&A a great what from it’s going have third quarter now calendar be far because a to the but the that fourth don’t going to on influence we and see there’s lot

Operator

Oliver Our comes Cowen from Chen & from question of line Company. the next

line Your open. is

Oliver Chen

the certain merchandise science longer that and of thoughts and and the looks that planning. degree the a you From product interest your the just And about procedures rails we’re the then secondly, reception and of will factors in maintain are of how continue and options a work. tested customer’s term just are broader and how my guard to around thought about have and navigation terms balancing of you an and do profession like and account basis question of the sitting what curious and you’ve art the on e-commerce perspective you risk to consumer process monitor in ensuring feeling options that

Dave Biese

only she I To little given point. say we navigating, product has joined deal probably great to the the the way it’s watch to she because be friction monitor things improvements checkout we’ve where honest what monitoring pages do path we those in every to a reflects purchase those literally landing, the of those been, information would model. That’s even point to tune from purchase on the describe top work been way is tricky we she to that can of describe of continue more for in and on say, the that’s bit when what good I all And keen how continuing monitor, we’ve putting is where is us to really on site everything. really as on pages a site, terms implementations. just do way way the And a fine that she the simply the and the through interacting funnel with the looking all to

deal other to great a just too her of is and merchandising really what like it’s a certain responding she that beyond way. experience there, you merchandize understanding of things the really what’s when in So, the and in terms

fulsome is that sense. it in So

call them usability really are her lately customer, is the the regularly fit we capabilities confirm As of and of, website, work that. I’ll our done fit great concerned, deal to I’ll ability fact we’ve something first. and far on hear in the talk as about Fit understand a from

more those. opportunities see of do we to So

better talking too feature for about feel is fit that the improve cause. that absolutely am fit pointed that certain have that we how ways we size her works fit to help I potentially understand her like will ranges to and also in at way really So a giving

my that. in would she’s the sense. thing going I the purchased in a be So going in in our where’s service been, more is to light oriented be for that that that say and account, what we about its it past to excited are terms of case, she in On information more customer

that strongly feel about too. we So

good all And the all on as to think risk. obviously far introduce we test, test it’s introduces I to a a we Lin. you have something ahead before we as to jump opposed But going so opposed and But speak. of As feature test an standpoint that a think we’re of, like, I’ll it. the element in to from and that everything of as go the time, that fashion service

Linda Heasley

I’m to we be we overly fashion going going take I but that as have want terms as cautious are positioning of of some misses. and apparel Oliver. to the to business, we in one in a are know business,

So new silhouettes for and guard to I is think fashion test one and customers. to against way that around the to our risk misses continue ideas downsize to

be we I think to little years, didn’t we is regular two we’ve and a on new and basis. and anything actually wanted brand reason a thing past our to come know we as a tatted give one too the we invite the to her and need her, giving safe at we repeated customers done so much some in I the too her think look I silhouettes of well back

guard about rail really So your one. the question great is a

working working leverage can read and etcetera test quickly can we a what’s and to attach demographic working new a what’s the we think more I silhouettes on quick very and specific get not size sometimes is it in website to a even to what’s us which and channel, harder wonderful what’s these mortar bricks do the working. and fit feedback though not associates lot sales of have give on who and we

think think to test new silhouettes. relative again, lot of learn a there’s opportunities and I in I

she we certain understand appropriate really I we come and that design were more better and the and showing wherever current might going. we’re to XX am teams able reason her giving are I will be her change to that to influence year, saying you’re a product make in XX think always offering but have months. close we the back months we influence always a feel to can going relevant and merchandising very excited and to about make things process. I’m to see the to this the what next her And

Did that So the look for near your again answer in question future. to I’m right? I going question

Oliver Chen

our to analysis the Dave are them And any in those last online to did thoughts customer experience the Would past. have you about and helpful. that in Thank friction you. opportunity experienced friction points about the thoughts question you, is they Thank customers experience points reengage lifestyle with the your love the the there? related what that and who value. of very it’s kind that just customers

Dave Biese

with I say would generally is, quarter. the exited first pleased were What as we file we the

it better, it us. there, do and a she she’s offer put we like. this her the better left and on hasn’t point characterize your I to So way, outflow more need and listen out To experience to

We are it again where file we she as on draw directly but back a from have are, very coming with a with she is very incredibly us, but pleased retail, to our to just standpoint, both we demographic relates a loyal. great file is channels. it not our continue And you still to bringing

your need So to the our we’re back see we world re-engage and in improved, that where we reason that’s and give us conversions point to regularly excited exciting. about come every her very that, to to

to with engagement from and that the our more customer Now back get we need standpoint.

quarter. throw new-to-brand with pleased in just and final my first growth fact In as the our that, I’ll were point, we

there, we and said this platform priority to we the lot to better. we have a think continue strength there’s and of here need strong to e-commerce as So a brand is grow we execute

Operator

some further Linda no turn the now back for call are will There questions over comments. time. to I closing this at

Linda Heasley

of that about got we us, I and our excited I’m have comments hope today. front you. Thank that in the you’ve from opportunities

engaging who a a and customer really strengths, loves each every of that to our very and well and significant base notably perform number most stores continue us. And have day. We by customers loyal

do of look incredible lot more can and so J. true work potential, to assets we Jill. core, to we to we your her. know for we with sharing our we and can before unlock much a our evolution While you in have thank interest our have at forward I you

Operator

This concludes call. today’s conference

disconnect. now may You

J.Jill (JILL) 31 May 182018 Q1 Earnings call transcript