JILL - Earnings call transcript Q4 2021

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Operator

Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the J.Jill Fourth Quarter and Full Year 2021 Earnings Conference Call. On today's call are Claire Spofford, President and Chief Executive Officer; and Mark Webb, Executive Vice President, Chief Financial Officer and Chief Operating Officer. [Operator Instructions] Before we begin, I need to remind you that certain comments made during these remarks may constitute forward-looking statements and are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. subject could known differ cause such are and unknown materially statements statements. that uncertainties actual forward-looking to and both risks from Such results to J.Jill's in and press are risks described Those release uncertainties and SEC filings. the forward-looking of XX, as undertake obligation XXXX, recording forward-looking these not March to does made update this J.Jill statements. The statements any are on and

the the Finally, press is remarks. A these financial measures J.Jill during measures XX, March may refer issued financial schedule release to GAAP showing XXXX. certain available non-GAAP adjusted in or non-GAAP versus reconciliation

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

Claire Spofford

J.Jill. and our I'm our in move to overview XXXX operator, of update as and Mark an J.Jill. an will going hello, cover financial recovery significant Thank thank you, you in and provide results our And XXXX, for then we operations marked of results everyone. business on into a strategy year Fiscal for interest detail. your

period my XXXX turbulence. bit provided want part J.Jill contributions lot their $XX and our above teammates hard strategic of of to cost were selling. of levels. objectives our products We off. thank saw pleased response a store management to compared negatively inventory XXXX in last shopping continuing regularly January XXX weekend our in XXXX, compared to beginning a focus and variant of of challenges highlights Friday recovery results great began managed some company Adjusted a XXXX, a in sales full saw of as a strong and have see taper for as in sales. we adjusted increase EBITDA to and grew $XXX fiscal sales to of year-over-year points gross the consumer sales as The early channel. compared the were driven to SG&A improved store and quarter increase price our basis a rate but a XX% into year: by increased than expense an I to their expansion and holiday results marched strong XXXX by points inventory changes year. new reflecting disciplined starts margin disciplined basis expenses significantly product the a the to in management. increased delivered to disciplined reflect QX, reflected cases efforts These are by significant by work the driving on the the XXX and tightly at Total were management. and to for driven shopping increase traffic guidance rate previously impacted all EBITDA, gross the Black of points traffic period we versus million, and pleased consumer recover million, XXX QX XXXX; January, XX% flowing earlier Omicron and later with of to margin primarily expanded basis strong entire team the driven Some as over on pre-COVID great in In behaviors

flow throughout inventory we on the improved were mentioned, and to management product, XXXX, As and previously focused EBITDA. regular yielding QX in disciplined new flow-through of

QX a we XXXX consumer being logistics see of in to point were XXX sales to margin strong expenses. despite in versus impacted improvement penetration freight more than We full price, our and response quarter higher by to elevated basis the yielding gross with and continued drive product a able offerings,

model our business around on The inventory executing expense we a beyond, discipline with of forward look business our new management. and hallmarks we will diligence As and with focused against to continued XXXX will remain continue regularly chooses flowed channels that shop whenever assortments, full she strong, base be our and with experience price for engaging loyal our across wherever to product customer to and customer valuable to at us. an response relevant

areas Our and forward in to driving of relevance modernize and growth value opportunity: programs, categories. main strategy of next built through profitable customers cohort new attract high is for and position proposition, performance strategic the and customers, for for potential on J.Jill brand five increase growth and our customers sub-brands going current marketing the brand convert drive J.Jill focused

brands, sub continue to build seen lean will and drive For productivity. into growth finally, to store We to our the and across further, example, initiatives and our you the J.Jill with potential Pure strong business summary, these enhance these develop environment. progress challenging In and results on new we've the on throughout Jill response calls. and dynamic a channels future progress for forward and for plan updating customer engagement And against drove the experience pleased highest we look fit macro locations. a year opportunity we execute the and we're in to despite the

continue the inventory very be strong We that we believe to performance business, disciplined our loyal to delights to of expense We particularly approach will regard the managing with XXXX, margin product great to continue coupled with customers on established going forward. flow this disciplines yield in management. focused and continuous

pleased we're to As we performance move our into with XXXX, date.

confidence relevant reengineered results. and and focus hand our going in it to our our continued as proposition brand persist, detail share products. our model to profitable and Mark With new ability results give and I'm over traction introducing unique financial our compelling turn we to to to on and customers deliver While headwinds that, us driving macro-related to operating value growth more

Mark Webb

good morning, you, And Thank everyone. Claire.

As million recovery full EBITDA of $XX to year total compared full improved expenses results, for lower, full $XX of and XXXX while growth were operating and of pre-COVID million adjusted delivered margins year updated compared was gross with consistent year were for significant expectations sales XXXX year model, controlled improvement sales fiscal an Claire to the our XX% we XXXX EBITDA financial $XXX expanded, over well When adjusted XXXX. as over year million a XXXX. J.Jill of mentioned, fiscal to

We more sets despite results frequent assortments, of the more are and large newness expense disciplined focused floor with very pleased product and management. inventory our made to product operating including the changes model, fewer

In by fell and subsided, QX operations over QX and continued their gross flow of voluntary actions my compared the of though sales markdown EBITDA cash addition Total inventories company and Store manage the long-term about about in as teams down to would comparable direct a XXXX sales, sold, to sales December the by up XX% effort the XXXX. with to $XX down increasing of strategy the tax guidance up the compared Direct most the were quarter. higher like which did sales cash significant impacting company to of full the due XXXX. the discipline from for to these which Total the were price in the of margin cases $XXX respect quarter reduce Sales impact versus sales generation much a half of performance compared debt QX driven dollars, COVID in XX% resulted recovery Traffic million. with early XX% adjusted J.Jill million, for also year more results are $XX sales These total in paydown the over above strengthen With sales. to thanks and of fourth XXXX success to to amount and with of off XXXX uncertainty to down slightly skewed lower recovery in our proceeds, results heavily with levels amidst in I of ending were versus to results levels. XXXX. sales cash in represent XXXX, XX% storage for million, million consistent followed and sales and contributed add refund back $XX prior considerable trends historically to driven to were for strongest channel. increased the the for January. X%, as QX quarter year-to-date of in percentage Omicron XX% XX%, fourth our by quarter direct in channel. offset markdown Omicron quarter, quarter. were cases likely fourth quarter November, partially Compared by our QX, including fiscal January

XXXX. in line up While was by increases with year, it profit. were QX the our over to promotions. in expectations. gross margin $XX XXX XX.X%, SG&A last million offset EBITDA QX by savings direct was gross Adjusted compared $XX and G&A was QX XXXX million QX profit of million, store loss total XXX to sales in XXXX. better release QX channel, basis gross adjusted gross a basis management XXXX, has overhead. approximately and to of XXXX total up selling $XX compared today's incremental $XX refer Please this to with driven selling EBITDA in in compared costs, press a to adjusted benefit million marketing charges points full EBITDA. freight company quarter $XX included expenses reduced points impacts incentive, $X the of in reconciliation margin price a negatively QX million million $XX in of and million for

flow, we plus of borrowings $XX about cash $XX of million our quarter of including expected zero resulting against from Turning our the $XX million operations, to quarter, ABL. cash tax million for cash refund, $XX generated end in of with million

to XX and Actual goods technology, offset supply We expedited the inventory costs projects and freight work into X.X% closed stores through to focus e-commerce We shipment to of ended than down investments lower healthier last tight options timing of with with expected fourth the guidance about over stores spend repair the projects. targeted store year compared when count, bringing units. was end-of-year respect and to stores. possible. capital the of We capital $X our bringing of inventory some the price to year, below year site XXXX this for to seven capital continue and XXXX. repairs $X.X early on the necessary we management year to prior that and full year. in chain a made million, year of use performed count in in quarter disruption just due $X full Capital the maintenance and to compared With million quarter spend balance end XXX expenditures total for were markdown pushed levels versus million,

and and we our grow XX% XX% $XX between to to fiscal outlook be XXXX, million the XXXX, now million. to compared Turning QX quarter and first $XX between adjusted to for XXXX sales of EBITDA fiscal expect for

the and we build model on operating to discipline continue to operate will relates year. this the enhancements enacted it with year, As full

rollout is margin, markdown grow in product quarters is the from to gross respect recovery we XXXX will and materials year. related respect timing will experienced in expected investments price achieved Important below to expense increases margin to of from gross challenging adjusted tailwinds, including while in spring note, aim strategic as the cadence, which last EBITDA, XXXX help dollars slightly pressure, store year. at talent of least the aided inflation we as the compared expect With pressure those to given annual the improvements to most expect gross EBITDA year-over-year we expected rate reductions marketing. offset throughout the respect vaccination in our and to last flat to making We relatively in quarter and to to QX, in operations to achieved we sales freight first of be growth raw modestly, expect we in anniversary With maintain XXXX, comparisons the half to by QX up in although recovery through in year, continue with inflation significant XXXX. be quarterly be expect promo and the QX which and selling further goal the we margin to the rates the cost maintain

six Regarding half store XX first to fiscal close with the the XXXX year. approximately plan of coming we in count, in stores

development locations and it selectively new process projects as begun business for expect capital, enhancing in investments Thank stores, are and spend respect I we scoping quarter. strategic opening stores and including weighted back into now fourth we of point-of-sale the investments you, and enhancing the $XX four to solution. e-commerce to are a store new planning XXXX to operator opportunities for new We between omni full increase the technology, million year will in make and to reviewing And to with and million up complete $XX questions. hand

Operator

Our is Instructions] question Research from Kloppenburg JJK Associates. [Operator you. with Janet Thank first

open. is Your line

Janet Kloppenburg

Good nice a quarter. morning, everyone and on congratulations

Mark Webb

Janet. Thanks,

Janet Kloppenburg

and the in top-line constrain I bit understand clearance here when top-line wanted constrained and going it fourth year? may you the a understand can you won’t in I like support channel, acceleration, that inventory levels could comparison to of both wanted also opportunity digital clear and feel first you against because And quarter? stores that in the the the clearance quarter little have don’t if about the talk would to levels it’s – the constrained this if be up if be which apples-to-apples that to the

Mark Webb

Sure.

So, you want to Janet, Claire? we’ll – me do start,

Claire Spofford

Sure.

Mark Webb

Okay. Great.

So reported levels mix which year, down the we overall, a that – at end much was we’ve first, versus full inventory X.X% been the discussing, as has all really of of level been and of markdown, along we out that work with full price respect to promotions conducting. well we healthier with the were part strategy our historically been price model, of of markdowns, as to way operating the sort inventory had the as

drag channel negative that QX. talked on the in we markdown fact did the showed constrain again that channel is the and historically channel, direct sales goods having that I So, a be it cleared in sales? about we think

we So, the within necessary model. as changes probably enacting to that the I think – operating view that’s

and start our to view the carrying to reduction end As we in to really – of in sort in will markdown anniversary that in right later lap significant we end inventory. the QX, and the model year we end, start level actions of the the QX, operating XXXX to

at quarter. price full say would from that markdown, tail now start inventory sort going goods would taking full the windows, start good maybe we I or are to EBITDA. of forward, are with we feel and next inventory the of in have levels cases in-transit as levels well lapping levels anything, they would and that It the year of cleanup. inventories potentially so historically. quarter inventory impacted gross bit through sales be start perspective are this carrying So, been of many bit unit One quarter If in-transit of others of And earlier or we’ll and little half They’re our So, but will be lot by still these as a end the look supply a levels preceded shipment we go some that the strategies the like of of to to larger right? shipping the receipts, to quarters to the for take quarters invest numbers the atypical, last we’ll is start end chain given in say elongated most thing, some atypical reported markdown mitigating industry quarter QX the QX, Janet, recovery a shape. year’s the we end in end probably strategy resulting a price. perhaps end higher to of at profit would the to look in in mixed than have a drive pleased has

Janet Kloppenburg

some increase And still couple Okay. you new just you’re productivity close stores you the year? Or come? And there right is there looking is you’re a at this questions. that? know to goal levels stores, that peak? and researching opportunity to price XX a in versus open more going get something to now? back is I stores to spectrum, you’re And Where there more Will is

Claire Spofford

there. There’s a in lot

quarter increases, So, store start more start But I why the about regard a increases on your opportunity with talked then with I specifically maybe general last to I’ll we Mark price price store as and don’t this view productivity, bit question a can and the about little to Janet. speak – think well.

and as some to retail We all freight, of we of for this and that have through manage that. increases we of seeing result looking the at our have, in tickets prices taken year approach a a adjusted as strategic we’re the costs some

back, to whole really the the step understand approach and that special at can’t look the and to we the think that’s value relative assortment, for be willing took that else. something somewhere more find will bit where customer she pay little was truly I a

will at look and with throughout year. this taken And place just butter significant are a place there peanut opportunity, really really that prices to still in increases, in our again, a have the make in we rest are strategically the where taking beginning quarter But for and can increase With so, hard we those stores and be important not of consumer, the price approach of the to to them, you’ll increasing our the and we way we openings a sense consumer. opportunity regard store business with store is engage the to it part will forward. think going a be

are year, on closed a get four like of but there or We economic that’s closures we the update economic feel magnitude may of three to desire that and at But stores that looking sort half can those year. targeted due we in there’s better quarterly the when purely have back QX, opportunities the to those were lot markets you of call, where details sort think our order we in markets there. have We in this of of stores. more the next get potential our probably we of those to models for exercise, a still stores

So, we’re looking at those markets.

looking have where of at in have years, targeted looking as migrated to certainly be We’re store we opening last the There new couple plan. that so over develop and been our markets. shifts all we’ll some at people of

Mark Webb

driven full-price a still to be but may and Full there slightly healthy say on then, to back profit there markdown the would store store a assortment below, levels. to sales sort driving like very opportunity to more migrate those store continues we to gross selling, of very, store feel and is is by as the that store the in productivity, Janet, with just prices productivity basis. below is reduction And I sales respect like-for-like stores peak, mostly really continue

Janet Kloppenburg

Thank you.

Operator

with next Telsey Dana The Telsey question Group. from is

is open. line Your

Dana Telsey

of to everyone Good Couple and things. progress. see nice morning, the

of are in you about then there. basis as side follow-ups from this few you a think How going impact last points on quarter, where, is, seeing As quarter. you are four continue expense, are you was XXX it product Second expense different just of points kind freight I to the basis freight pickup with you. planning think XXX your balance an thing And what forward? seeing categories? you Thank occasion and newness core the

Mark Webb

go talk around to exciting product? let about then don’t the freight Claire Yes. Why I first stuff

that we expecting Dana, rate our run of back last – provided, in So, the are of guidance we sort from the are half we year.

really a QX, and received freight in efforts that right? in you in you probably to you, units that efforts, start that given you the units you sold, sell that don’t that numbers to and So, started quarter. the your quoted QX holistic our cost we is number quarter though quarter your So, attaches – the more even all of you

world pricing So point, lot in included rate who of of first full But is guidance, which a the we’re there, assume – say would year. through some those the is expect we the starting continue the some And at general knows amount on freight, a the QX least of right we would we which we in see sort per improvement half level assuming to breaks guidance parts level there’s by, the run we that the of provided year. of which on of back encouraged of probably on now. small – some elevated basis, the moving still year in essentially reference some half the unit to continue then are though

Claire Spofford

question question framed with was I sort Dana, Yes. we’re regard and currently product, around on And what I of seeing. think your then, – to the can

Dana Telsey

Yes.

Claire Spofford

Okay.

dresses. So seeing real categories are in yes, like we strength

ready to We’re – extent, coming for in hear reward-robing to teams starting best people hearing and to we’re from some certainly, getting work. the are that store

dinner, seeing general, seeing close people out mentioned, us. friends get Day then how getting hearing And and and Mother’s again, products to things. attending outfits to for We think for also are we’re their occasions, for both to in out excited seeing regard does buying the those We’re a look and and you impact with forward buying always all I for and of travel business those. and are as But people gatherings, about of big Easter that. that people are

in So certainly, things. those would expect categories all to strength with you regard to the of see

categories regard in to of those certainly, you So all the strength see would expect with to things.

I Some of in packable novelties And strength again, very things dresses. seeing, to we're our travel, kits continue very, as for do well. said, easy, the

standpoint, about embroideries our are then special that Our strength anywhere last we a else. prints, of year think talked I Pure can't find things you all from the Jill. sub-brand And

and we see potential as about She you'll to continue opportunity been to strength to through see feel I love has very – about Jill strong, But of assortment. the great the we We continues there. more sub-brand, mean, we and see I We sorry, Fit Fit year. respond. Pure continue to strength then and able and this, And work hear across that continue being J.Jill potential also say there. that to honestly, the see

latest very expect the drop turning as I forward of we really been And wherever has core And strength strong. into basics but to are see move is programs, nicely. strong, increased our season. Our denim net our we said, as

Dana Telsey

then And steps $XX $XX XXXX Thank $X on in in you. it million CapEx, up million from the I to XXXX. it. to think million Got

you. the Just any have a And any range? they cotton? side, what Do of you're on and customers seeing in the throughout just customers, question, digital that? how Are And on repeat unpacking terms taken then big year? new you update anything mid-single-digit what you're on on something raw range that? Janet's seeing? capturing up journey the terms And is increases? Thank or what of then price then of scale following you like material And in

Mark Webb

the to I'll journey I'll will and for and cotton handle Dana, then question, capital on. fully to Claire take that then over digital going and we're turn Claire it I

and the investments. a latest first in of have completing platform. – to migration the quarter, completed the related, really version our to We're of is expense capital foremost, in step-up the capital, So new technology website

that done We has up roll operating in marketing business help, Route that model X. technology support been your a in sleeves work a lot are of primarily sort bit of to some the around areas investing we've and the merge the process areas planning

of the for So, to a those evaluating many support some technological efforts. for and provide system of really, we're excited stores. begin going then journey the And to we're new POS

has store part our our of POS habits a And customers' many times, mentioned a the for Our been important existing is channel. quite very as store important in very and while. we've

omni HQ completes that the current sort And is capital some of step-up flow bringing really in store seen new part then a course, XXXX, in that system, well capital spend then, so, catch-up when looking some fleet we've in of at for generation. as even projects the DC very cash big and strong year. enhancing, in a Still visual step-up discipline. opening with will new cash around feel step-up. like maintenance with the And managed some the business, free And we're stores, generation cash produce with the maintenance, as and POS still of significant the

Claire Spofford

Great. absolutely, we're marketing. look acquisition new customer at And for journey, – with for digital digital we regard and starting to constantly the and into channels test

new customers Still, through there, doing those enjoying she's all certainly the creating the increasingly. social new is lot active on we going for and and able introducing digital that our we there. larger as to brand lot of we're and to a brand think channels, out social introduce lean a voice people into channels media we're to potential Facebook. be very sophisticated, customer a of Instagram relatively Our And

younger. digital towards years print. slightly four five One customer, does tend of shifting of of on or of or our sort a heavily bring efforts is She younger to digitally good some the more that even ancillary customer the than through a benefits acquisition things

presence And brand the very actively so, with those approach and brand developing we're programs a bigger performance – disciplined marketing. the partnering to

but drive are customer customers of more acquisition, help valuable that will to so us. only not that those So retention

very year-over-year and customers’ a after enjoy to continue of rate retention We those season season. high

So your that efforts the those the be come, but we'll to of lot more answer question? does are about that some quarters talking on a

Dana Telsey

Yes.

Mark Webb

– it I'll think was – the up, frame cotton then And Dana. I it

better of for cotton within but is a and cotton, end very we're – us, assortment important committed cotton. one cotton only to the and not that fabrication the As

So, cotton very is important.

had around I to Claire like that offset of – as an some can part and offset and more that the continue then promos to well butter sort you the guidance deliver around markdown that like. to say pricing related for detail cycle but pricing provided, as increases increases are fully us the the to guidance So mentioned, But we're the the business strategic We opportunity not opportunity not provided of inflation have I'll targeted Dana that, as on to approached. opportunity peanut the continued Claire, expecting we out cotton. we of if it's go to that we as feel margin full help we the year. had for the help big a full-price that would

Dana Telsey

Got it. Thank you.

Mark Webb

bet. You

Operator

with is The from next question Jefferies. Daniel Lupo

is line Your open.

Daniel Lupo

whether it's of kind corporate the hosting I maybe open Hey, employee managed guys excess a thank for much terms in kind very level? how the through market? or DC tight wanted positions, you just call. to And of of you you've ask seeing store turnover, what labor you're

Claire Spofford

Great question. Sure.

been in the that to tell challenges and experiencing is pleased terms will certainly, with to everybody talent. attract think the past a market, talent So tight in we actually have ability attract I our I we that, is presents the that it few and labor you of months. that team wanted

challenging to the level they want making But headwind, we're think of they to in than our the with the result. how engagement, our with to potential that a environment, where a scarcity general And decisions there. a just folks a turnover and, with strong of so, In very hard and there's a have spoken work. past want and live to about definitely a see of level that of the as customers able again, have of talent their that not talent really we've board connection caliber associates stores, the just bring on store lives people been out about from brand standpoint, also but we working lower against I but we is and continue pleased

to talk we're And so, stores the Mark, about at ability manage I know want the to then, and at all? relatively pleased our DC don't And you with corporate. in if

Mark Webb

I'd DC. say around statement the a similar

of us We have cetera, processing nature. model of workforce world sales-related operating been the focus lot DC – goods help goods that very sale employee making a workforce helped on that and and and part loyal versus that of in the changes a that in efficiency, markdowns things have that fulfilling are et we've engaged the goods orders shipping versus and or actually

the So investments are wage to making business we and soft help through into we guidance the something in to – comes and inflation that indicated the expecting in et across And us of continue think, QX and in the we're – board, inflation pressures similar system the we're I rest forward, but for talent watching. merit, that year. our around drive year the drive cetera, also that

Daniel Lupo

be helpful. appreciate that. health that kind gas, the seeing answer, of know but And thoughts of heavy you. I probably of amongst question tough you I how kind environment, Like general inflationary consumer any et view food, just kind base? is your your would I'm it's That’s cetera? – helpful. consumer, a this given then Just in to of your Thank whether are do kind of you hesitancy

Claire Spofford

of thinking – had honestly, of are also believe we last less impact established, business that our therefore of the impact those some about that. we're things is She in year an talk in Again, lapping and marginal and how is of stimulus sheet That lucky susceptible about is terms our always pretty to relatively much last Sure. don't excellent. increases on are year. consumer very people talk we she the

in So lapping year. terms therefore, not issue us of it an for this

to customer, she seen something the so tend an and like is it. to want pay really we something, to business the willing We have to And environment. far, our impact for due see she not inflationary

So, impact. we haven't an seen

Daniel Lupo

just for And Okay. one me. last then

this healthy kind do kind and year flow prepaying You about of for of cash position. balance your what Have you you excess excess kind maybe mentioned the of kind How thought debt? cash? in plans that are sheet? of pretty a think Or cash cash of

Mark Webb

That lenders. The and result a loan able Hey get Dan, good we the with with long ultimately it strike pretty the very I the a we but get question. were minds, I that good we have We we to were pleased structure mentioned Look, rate are way, to I interested the can a and of the there. our cash debt. that means that certainly continuing business. a In in said, less it it, is improve term pretty to think in deal of on of generation good with our term – we think, XXXX on think capital it. business,

on the where thinking we and So, are of objectives looking improve on cetera, is as the at options health et our part to markets point, and report the but opportunistically to continue and to radar are, the nothing that balance at business definitely about the we're sheet. of

Daniel Lupo

Okay, your you I appreciate that’s time much. very today. Thank great.

Mark Webb

you. Thank

Operator

this further no closing remarks. questions at for the I turn over time. will any Claire We have call to

Claire Spofford

you this for and in. to operator participated look our call next everyone tell you, results forward thank Thank in to and sharing we who We're happy with our and quarter. listened story, you

Operator

may you Thank for call. gentlemen, now participating you and and this concludes today's Ladies disconnect. conference

J.Jill (JILL) 22 Mar 222021 Q4 Earnings call transcript