JILL - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Shelly, and I will be your conference operator today. At this time, I would like to welcome, everyone, to the J.Jill First Quarter 2019 Conference Call. On today's call are Linda Heasley, President and CEO of J.Jill Inc., and Mark Webb, Executive Vice President and CFO and joining us for Q&A portion of the call is Steve Sung, Vice President of Finance. All lines have been placed on mute, to prevent any background noise [Operator Instructions].

the need call you and Private may pursuant and I made certain are Securities begin, safe to this the of during constitute within amended. Litigation we Reform to of XXXX that remind comments made harbor Act Before provisions of as the meaning forward-looking statements from uncertainties cause actual results Such forward-looking both to could subject known and differ that materially such statements are unknown statements. risks and to

SEC the risks of forward-looking filings. statements. uncertainties do J.Jill's described obligation release Those forward-looking as this date update any to we The in made the press are and and today not statements undertake our and are of call,

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

not you release, Relations jjill.com. do today's you the may of obtain have our a of Investor by website at visiting page copy press If one

to will Linda. I call now turn the over

Linda Heasley

morning. Thank and good you,

We are resulting and for outlook. quarter disappointed full year our first performance required to adjustment with QX our and the the

same address start experienced also the wet execution we many I unseasonably cool soft to detail. we to and spring, as the had which issues, competitors in While more due will year an

on and our in confident growth, focused our performance, execution in remain profitable We to with long-term believe improving consistent year-to-date ability are we and strategies urgency. drive the but our given

key past and over our we have distilled current months, We to I have reviewed to marketing have inventory the together down XX place performance. with opportunities product, additions team the strong three in made and management. the team significant areas have

also her fabrics do with while her the continue appreciation the and is we to see J.Jill. and newness we the desires. tried that of most First At giving she engender be must to silhouettes time, and same more product, true thing remember opportunities important we relevant, the product loyalty

programs challenges, are key the of lapsed in that color and the In product for deliver. rebalance she the tops missed to and us. This expects novelty we and did We working not half year. our from layering quarter back we assortment pieces to response

into We incremental that delight size going of in to and and make correctable. ranges our including Longer able offer we to will term impact also In a forward. short-term, sub-categories is look will teams more build efforts to continue adjustments forward cycle investments is collaboration product product year. the can. will some our in we become opportunities The disappointing, we next have more customer streamline where stores, QX new initiatives we on but it additional impact as design development

some mail the saw from support results activities. Next we quarter, we and mail better into when shift some traffic We add to we back digital. media That belatedly. point the we made hindsight soon. touch were adjustments promotional marketing, options our along direct quickly in direct to moved too some changes alternative able plan levels albeit to primarily planned too much going to restored In digital

boost brand should ran over significant awareness which The number of digital longer we ads the a impression, drove term.

between creative and optimize to our campaigns, to attract expression continue and will of efforts effectiveness the the customers to test the alternative our balance and maximize to messaging and We overall media catalog J.Jill.

changes. adjusted more a remainder have approach to the measured We plans make our year the of for these to

well quarter not actions enough Therefore end aggressive inventory the year we did with to after that fast the to planned. start was moved address of at persisted. the trend management, above Inventory the soft the

updated and Mark guidance. reflected we subsequently As immediate in to will actions taking inventory, QX as full our discuss, right are will our which size year pressure

reiterate year ago. a said started what I I quickly I want to when

embracing or also means demographics confined than our business age, or of customers to what us committed remarkable be by before it to-date, opportunity to and expectations We're more be vision for brand, women the be we to new more by for not loyal artificial have our size, defined others. to boundaries have a defining We truly while the to been inclusive. women

nine months our team past strengthened and company. I have Beitler, significantly already Brian work by been and the with encouraged the the Shelley short-term Over leadership they has been Liebsch, Staples have Elliot that the in am begun

more engage a plan experience better seamless shopping brand the deeply relevant to product while touch and We for felicitating high place while strong our and strength more all focus that quality on her. integrates a have cohesive customer, with experiences, delivering in and

noted require the of part but are previously efforts our be felt Mark Chief awareness will add brand had build contributions to well executive under too will to expected from deliver they team. and you hear new Brian’s in results. until anticipated. time I and Today Elliot’s eagerly Shelley the His Officer the assortment next to Financial Webb, year. are latest early won't way, impact and As the evolve

slower disappointing to the the opportunity. summary, have notwithstanding associated and In revised year the guidance great we start

development integrated, closely a We work shopping continue processes deserves. right done to efficiency. seamless brand examining design and of strength focus on strategies customer relevant This the product experience deliver includes and and trend harnessing design our cycle, flows wants the across and our for overall frictionless more to teams and our while work the improve optimizing organization the being building to merchandizing customers. We're to our by shorten our

now and across a the experience is deliver the all end in largely our points. touch the future. is to and opportunities about remarkable J.Jill adjustable confident we I’m audience. brand, product serving our her remarkable In it in

gather to can continue we build to and and which have continue on changes foundations and amazing reinforce required our grow. the realize assets to We

of an long-term do and important XXXX to year the we J.Jill. groundwork plenty be to as lay work profitable have continues We of the growth for

with Mark Gap industry that and the comes I Chief Vice to foundation, more new Bay. extensive experience of Officer. our recently, Financial pleased part and introduce Hudson am As with President Executive to Webb, in Mark J.Jill

our results to turn now detail. Mark? will I outlook more in to it and over him review

Mark Webb

Thank morning, good and everyone. you, Linda

on First, join the I very am excited personal J.Jill a note, to team.

impressed the strength to getting I've brand. excited great growing the Over business. core weeks, of continue this opportunity the with and underlying I'm the know the by company few financial last been to

clearly start results, facing would sharing a to year, actions can to liked in my assure it's you very are I them. are and I to disappointing the said be the That we correct taking been have the fixable, are better while that right experience the teams issues

the through results I in for Before quarter I and quarter outlook share will financial first our the second year, go detail.

profit X.X%, retail direct store comparable of million, total the by was million sales by as response sales For was promotions a gross versus sales under channel. XX% by decline $XXX.X a driven X.X% rate percent million. XXX sales sales margin year's year XX.X% last driven elevated increased to compared The total our Total and just decreased quarter. last quarter, $XXX.X in $XXX.X were versus points in Total to million primarily quarter. net to of XX.X%. basis Gross reduction last was the throughout $XXX.X the software company year's

$XXX.X $XXX.X were expenses SG&A million year. versus million last

of quarter year. transition of XXXX last first CEO million to related the $X.X The expenses one-time fiscal included

quarter excluding was net of XX.X% As of expenses these SG&A first XX.X% one-time and expense the for XXXX. versus sales, a total non-recurring percentage

of $X and of with As of the first we primary mentioned as million and incremental promotional support QX Along technology made to primarily earlier. in the on percentage activity stated These sales. traffic expense the planning and to expenses year. to-date marketing are a of increase initiative our plan with half our the call, associated last incurred driver design on million expected be was earnings the in investments drive to elevated $X SG&A

X.X% or last sales was year. was quarter $XX.X income versus year. EBITDA of operating million, or million $XX.X $XX.X $XX XX% for million of to compared GAAP million, last Adjusted the sales

Tax quarter expense was Interest reconciliation sales was of EBITDA first was million As last versus million million to adjusted XX.X% of million, of $X was press quarter XXXX. EBITDA income A for $X.X rate our the XX.X% versus in is $X.X XX.X%, effective XX.X% to expense a release. included last $X.X the and versus percentage net quarter in the compared tax year. for the year.

was million share $XX.X initiative. compares for or per of income and the year. or the period This $X.XX includes diluted share net GAAP technology $X.XX $X.XX million $X.X investment to last related per diluted to

to expenses fiscal CEO the share one-time XXXX transition. Adjusted related for was diluted earnings per $X.XX. the Excluding

balance we ended the the $XX.X to quarter Turning sheet, cash. with million in

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

quarter, we closed end. to and During store the two XXX bringing at stores stores count one quarter opened

billion. Finally, were capital $X.X expenditures

and rest for must entered plan. outlook our of levels these and as a address actions to now quarter Linda with of performance, we about taken of first the We cause well being there. above issues quarter inventory the result talked second root QX the Turning year,

the experience inventory, our guidance our in brand immediately reflected as necessary on impact quarter second now this to the in and balancing actions address site. to in preserving and goal Our the our customer is on take the stores while

forward, the the bring around structure undertaking inventory, strategies flexibility our to assortment we and in ensure are the balanced also a seasoned Going management execution. review deep and And pace we changed cost of fine to improving any reviewing P&L. finally, [ph] to more of plans overall to the discipline of successful are

basis gross negative for positive percentage be As Interest year-over-year. points sales to decrease quarter expect sales of expense margin quarter. last the points, between X about these net a to the result total X between year. the approximately second following will XXX to actions, comparable will flat and we decrease Total for X%, will be X%

compares loss of $X.XX, expect due close quarter the to This four investment. stores to ending be to and the open share two, to is with XXXX. our And stores. $X.XX approximately expected XXX quarter technology in lastly, $X.XX Net we including second per to fiscal to $X.XX

revised the the half by year to are fourth quarter the third quarter. improvement view as full half well, moderating and measured first outlook goal our see year, we second stabilization given our with the outlook year, to in now of Turning the for of of the for the

total expect the year sales we to For X%. to decrease comparable full X%

down total expect net sales flat We be to to X%.

year-over-year. to margin expect basis We XXX decrease about gross points

$X.XX million diluted of to of is expected per due tax of a fiscal the Diluted share technology to the to Interest range in XX%. $X.XX to earnings to approximately decrease $X.XX, be increase to investments. $X.XX will per $X for be expense is XXXX. in The compares relative expected XXXX. share fiscal the earnings year This about which to rate includes $X.XX

exposure does the tariffs, tariffs. unclear. exact which Full not steps from Last guidance lower began latest additional eliminate still fluid impact year to potential of any reduces we as round taking the impact manufacturing, year, of doesn't is include the situation EPS China and but to impact any

are committed and store on maintenance In plans investments. and the for of capital light view focusing our reviewing capital we performance revised of XXXX, our year

to determine a path of We best our lot have initiative learned most are and pausing efficient the planning phase design in now technology and forward. the

That for concludes the prepared call back remarks. will the I to now turn my operator questions.

Operator

minus [Operator Instructions] comes from Trussell from question Your Bank. Paul first Deutsche

is line open. Your now

Paul Trussell

are into levels the a periods. year-over-year, heading after Inventory quarter, down morning. second the being surprising Good past bit few

Just there like the were seems here light. there help me about in on what to happened how understand some execution But a front. XQ, bit the certainly certainly sales it maybe think spread, was disconnect

And moving have then on plan ability gross more going product should forward? just margin about margins stores to cadence you the help us forward the how going we to getting about levels. think And in the through to cleaner when the understand and stable and think how

Linda Heasley

worked to pass very line. Paul. year -- Relative Mark. inventory Hi, and we I'll levels over as have year-over-year, I'll levels to to in the inventory recall, you hard bring last it we start

are whereby planned. We inventory we now relative to have were to not we degree in similar over sales that the the faced situation

on in number deliveries, quarter that to keep cool we had. to it bring -- product against we got implemented year, of activities very This in of mean, in spring which was we missteps and the that had the the top procedures And in got that cool, line the more us sufficient. promotional do customer each addition unseasonably of weather a voted us, line, the the of not required to I try ahead the to this with to first that. months quarter we of

as right, having as and more now to well to And selling in we reaction So sense product bring that. opportunities respond see back it sales aggressive improved that -- well we of and line. was under not That's we a urgency a action as that those being to basis must a and we execution in combination we is to trend that an quickly. follow And have as not the are plan, need team, in a more and the to season adopt. Mark? execution, of when taking

Mark Webb

Linda what season. the forward to would in taking and with just I we're Paul. Hi, to it said, respect you add alluded go to actions

started trend quickly when think QX get during I front in enough soft, that to weren't move inventory. of just taken of fashions the

we on the think and It's will we've with act QX QX. ended I how taken the we is So what on an way guided we've as that now inventory performance, the to a approach reflection inventory. that

We combination start but QX. the other protect will half a through also dispose the to through back experience in means to through the is of intent customer our the of it stores, order year clean. But

And the on relates full well our as margin, that margin that as gross gross on to guidance, hit in in it both QX, the guided we to represents as year guidance and the implied the EPS. line

that related being be to conservative it's margin that. approach going you and two to of the environment think to out half gross the a year, of be likely things, back need that there I reflective still first we to the really promotional can in we're see taking

we and better we -- still then, between matters opinion period the the anybody transition back making period the from still team-to-team. in on in of the here still while and that in has that are half that that And transition an are product tweaks it, is we're year, teams believes believes

our So more for little as relates of more approach leaning really gross bit combination in metric us. a guidance half, to controllable those and our for SG&A on margin the a back factors to

Paul Trussell

website maybe then a the lot investments business. on And in and We’ve technology you. app. touch the Thank of had e-commerce the just in

growth are standpoint? should platform And from us give of that more forward going update a we an a we drumbeat see on channel? where in maybe steady Just

Linda Heasley

fixing had paid also of in with problems heavily investments Yes, the have is one her e-commerce but We've platform amp And and responded we the be has the year quarter. we off. should. to the and this the also spots that. make up very well Actually, creative more to the more brighter before last we to shoppable and from messaging The made invested it her, make more the it inclusive. imagery site to overall for relevant she year

The and off. has investment social also we have in marketing digital paid placed

some younger. fashion much seeing been the that degree that new not her, deliver in we customer put a to the as are testing slightly significant coming a But brand have younger, on the be as site of items engage tends we to that that's to more content she we've more into forward retail. before We site to in well we the

more again, quarter. go would the we So speak. as in continuing tell one you was invest -- it I that we're of expect forward. there's And e-commerce brighter from it spots even the And we growth to of

Paul Trussell

you. Best Thank luck. of

Linda Heasley

Thank you.

Operator

line of comes question Bank Lorraine next from from America. Hutchinson Your the of

is line Your now open.

Lorraine Hutchinson

Good Thanks. morning.

margin feel your to the that in the follow-up it back you point? at half inventory, gross do the want you'll at comfortable that be to half? the you Just to on is levels looking the this And at wanted start inventory improve able sales to be pace, current back

Mark Webb

show that the -- to first largely line a what the conservative and the performance, gross the margin in we back we're we actions full with as a coupled with the modeling guidance the guidance half them after QX Inventories half of Lorraine, take year be. still margin as in should out back think, want the we approach work with -- bit taking where to half. be that full gross in modeling should our the -- QX I along

be there, optimistic to caution, things on The environment that the cadence. QX. the second respectful Linda issues we the and that have environment teams, -- fix just related we way just we're as we that along going we the the in I new transition tweaking not period, in make some need the promotional And that into and on sure elements have where still promotional we then will that need enough in some the of is and is are had address too product you if are to to to still we diagnosed cognize mentioned, new margin macro we the out two and described, the

Lorraine Hutchinson

you. Thank

Operator

of from from and Chen comes line Oliver question the Cowen Company. next Your

Your line open. is now

Ross Collins

taking morning. Good is Ross Oliver. for for question. Thanks our Collins on This

on prepared remarks I a guess the to much little guess, Just question that I want too the clarify mentioned what just you first quarter, too a ask in side, or you the soon to speak marketing bit more could means? that to

secondly, off you've what And a then connection just does with investment the then that Thanks. how require that way the versus any And SG&A rightsizing looking scale the customer. you incremental ahead previously that line? still just secondly, in of maintains communicated back your on strategy measured

Linda Heasley

question. the we we’ve media trying size your the for spend, looking mix the catalog catalog that two market been response us. relative in in mixing et overall we options, to right underscore in you that And at two, the investment the relative role the distribute cetera. to messaging doing Relative Thank of it’s to significant a been of file bottom to of new rate in to the for the alternating the addressing drop have pages number marketing drop

doing and paying a work much as a off and And be print too of shifted we to digital probably do moved those way. in very social social digital seem little that dollars all although we good into digital, social into from and

customer for as that’s using the guidance the all sizing redeem of for remixing investment fast the we're print spend providing. the I looking the the what not customer. little within more It’s the addressed better inspiration she that’s we've of think the engage is the that and catalog a and Relative for mean part being and you at SG&A, for rollover points catalog again cover. too moved front we're year we what by, on appreciating much coupon the is right does to and catalog our while to back too touch might She that we into invested highly

Ross Collins

thank you. Great,

Linda Heasley

Thank you.

Operator

of Retail Your next the question Shapiro line Tracker. comes from from Marni

now is open. line Your

Marni Shapiro

Welcome, Mark, nice so to guys. Hey, voice. hear your

Mark Webb

Thank you.

Marni Shapiro

could And from Linda, the examples the then, that you thing year you far hit you were customer a So, because you talking if forward how talk could I one in just just going too the novelty, maybe or store novelty point margin color? you I a two didn’t about you the where with to guess, guess, about little and team more lacking color and you if the balance, felt resonate color that mentioned the bit to about swung to that side. so Mark pendulum do gross now a not importantly wise

Linda Heasley

point fire, in defiantly a of boundary good Very of mainly blue February the our end color that. choices vessel have which we was were happen. come dominant book yellows, tons it’s pilot occurred where to didn’t yellows additional to Relative in expecting color, and

So it was blue, the very the [ph] went part. pilot. for based brown on April floor became and then And and black March to on the most white a khaki

was that’s appreciated options and told all her and failed blue, loves see with expect this the that a was we her, to and black of what levels side, Our representation groups also customer think khaki right, to broadly, as color in focus where to is was levels she being have she of she of narrow did color but see not we well. expected expects tight of she trend the but to we it pinks on and important, way appeal

red being largely it’s for we embroidery, us berry in In base ratios to means and and the flat February were novelty, to that respect top low. bottom With that’s texture pattern, where it’s floor print, missed. too our novelty it’s

we're into July significantly appreciation particularly, part in and June, May added August the go particularly we quarter. So sales back going the have as for -- well color moving to seeing nice product, we're of this as as the uptick and palette into going forward

takes place. is to team And the that I'm in dependent approach seasonal one excited which of a of relative and So product into color goes the beginning I by month impact that on are at lot building next. see the the part addressed is it's what into palette a consideration looking to a palette month think balanced drop, a every into year, this from how going put what the next palette, addressing not what seasonal the forward the We're more that's to go into we with of in color year right team has now past. color been much and The part was we new new relative carryover put I able the very back into place.

Marni Shapiro

kind And into group move. some that Yes, or the orange, if curious seasonal elements the the popped are today, to be of in think kind of novelty and of the I beautiful, the which going store back sounds more that on the we shift I pop works other tassels the like should the color look in it's the the exist? I'm that to to store, that in the right not just within groups a is shirts, which walked expect significant just

Linda Heasley

Exactly.

Marni Shapiro

Okay.

Linda Heasley

color, we're really about. in ground we basis, what want she those what exactly looking of that be all fussy, because is she have those she too doesn't with she We details. It’s looks for careful but pop to it is tassels, that, be it can't talking a looking appreciate to she for. for That's neutral

thank for noticing. you So

Marni Shapiro

Well, we'll immediately you. it with great comes best in it of looks rest. stuff this, once I the and store. talk with sells see That you offline luck and out Thank to

Linda Heasley

Thank you.

Operator

from next of the Our line [Operator Instructions] Greenberger Kimberly question [ph]. comes

your question Fargo. Boruchow Sorry, Ike Wells from of comes from next line

Your line is open.

Lauren Frasch

cost question for you. Good Ike. morning, for have this is I another got Frasch Lauren on

tech to year, your your you. how are on within pull about than marketing, Given back thinking costs? structure other this investments opportunities other you expense Thank

Mark Webb

about specifics that -- think in a honestly to we're look we’re dive be take cost what structure I deep the because to into talk going not we overall and ready would Yes, reinvest just maybe think streamline certain and stages the review a and to invest a we smarter just spends honestly bit the through. early taking But areas opportunity of there's others. in in about

of the in of to to planning and learned now the best completing phases respect look to we've the design capabilities digest are the sufficiently the initial very learned lot process, final desired then technology how we I things. pausing a what initial we've and most through And -- good with pressing mentioned we've just taking that right. initiative, at and most and that are stages next, a invest completed in

the capital mentioned. spend, we encompasses that as SG&A So the as the that IT well and structure

Lauren Frasch

helpful. very that’s you. Thank Great,

Mark Webb

Sure.

Operator

no time. questions This this at today's are further call. concludes conference There

may You now disconnect.

J.Jill (JILL) 30 May 192019 Q1 Earnings call transcript