JILL - Earnings call transcript Q2 2024

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Operator

Good morning. My name is Jay El, and I will be your conference operator today. At this time, I would like to welcome everyone to the J.Jill's Second Quarter 2023 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. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. and are forward-looking the recording these statements of XX, uncertainties J.Jill's release are forward-looking and undertake August filings. The not SEC made XXXX, statements. risks described to press in and as any Those obligation does update J.Jill on this

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

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

Claire Spofford

our and I'll before and to performance we'll second us hello, operator, on review you Thank then this provide you, an financial in begin for few initiatives by more morning. discussion to strategic update of our joining over Mark our from detail. outlook quarter Thank our a turning performance, everyone. highlights call the and reviewing

results trend that Our second the in nice over exceeded a reflected quarter quarter. progressed improvement and expectations our

our this important we seeks the quarter that for a an historically and wardrobes. perspective. In quarter spring and is summer been us customer franchises key from summer for dresses, tees As a and EBITDA it reminder, our as into second largest lean like our period sales has season, linen her late

and hesitancy and our into items, trend exhibited color her early the a details seasonal spend more novelty accessories customer with summer responded favorites, joyful and highlighted key which the moved While months, bright with pallet. well as summer our we forward on in were she quarter, to

see sales price for clear typically a a message retail, disciplined appropriate in only our we inventory strategy addition, category-specific we level both with which strength those in pleased from new-to-brand customer the to results season. saw inclusivity were an while across the growth J.Jill we of to but trend of value to the In size nice with our are approach spurred balanced, for with are month drove items, and especially promotions our but pleased our channel. channels, end were pleased effect selling management, that energizing in sales-focused line also age our demographic, We full the at customers drove customers lower direct to July, that to also initiative, in maintain brought leveraged with We new target sub-brand a not we see has a of seeing assortment. In conjunction Wearever. in

will can as Capsule, we a lives. totality are the with highlighting customer versatile versatility and woman to Works dinner it our differentiated fullness to celebrates This that casual diversity J.Jill's of from reinforces design our that ethos work fall, brand into message introducing be move today's and environment Wearever friends. we inherent pieces the and As of follow is our a their

channel, a across the our of tools the to investments POS our be end now QX, our that customer and believe to focus Mark of efficiencies the these we're our out we create on and omnichannel experience we're we support in system. will ability with infrastructure improvement believe and strengthening enhancements management stores, more to our customers support our upgrade our will help next system, are improve making our to our with the Turning top order the completed We line by Within discuss, systems. in roll for provide continuing performance. new will phase will omni our which and as enhancements operations. Within of beginning direct capabilities experience the strategic seamless

utilize, their added it and is some to new how-to-measure a of such as product inform QX, clicking being making see are fit engagement tab customers that shown more of We've will hover features. we the updated made which our to states features the fit on measurements updates take and their confidently as they the as We to our launched the relevant she get product know to in viewing site, identify a also able increase pages new perfect products of outfit order them. our own to of Model, to expected. In fit and size. to guide, most customers The One the our the can into better look listing highlights well customers ensuring intuitive priorities top for customers' sense so as measurements without great page how Shop

be We believe can encouraged the which pages thus are help and have Shops, enhancements us will landing dedicated thematic Featured we elevated to with launched rates styling also and return results these far. early used to the been curate inspiration. We experiencing outfitting address

we and new styles continue placements experience addition, outfitting our ability build to In additional imagery, the inspiring faster to to with sites. respond on

stores our the growth summary, our the support As our channels initiatives, inclusivity and customers than capabilities. and base in we we will initiative the with size pleased introducing omni the new more look customer our through we're with we progress brand and sub-brands experience our across single-channel tools spend against and enhanced are particular, our to enhancements omnichannel including with customer. In strengthening customers ahead, growth who making and Xx direct in approximately believe

trends in responsiveness with we the both felt by late business, the the are quarter. in consistent consumer levels we to are are improved we that the enter respect with our sentiment seeing third As second encouraged quarter, we and

our and with remainder focus of of operate leveraging on continue cautious number our discipline with model upcoming respect of but take strong to a have and with balanced to We fall our us we year, expect and to the the weeks ahead for sets, a floor to plans foundation. big approach continue

volatile thank for admirably environment. As always, like very to I'd customer our team executing in a exemplary

to turn our over I discuss performance Mark more financial detail. Now will to in the call

Mark Webb

the in incurred was higher second quarter to strength QX EBITDA generated freight reflected our markdown cash model Claire, to and $XXX the they gross stabilizing to while better quarter comparable underlying for you, activity a points X.X% about were sales year's X% to Please from EBITDA fewer but about returns reconciliation delivered negatively stores. $X.X incentive decreased was AUCs. SG&A while respond million, down adjusted management were We company lower QX again, $XX net XXXX. we with pleased we in X.X% trends to release for average saw pleased basis were XXXX and was price, were by year, last promotional accruals. Adjusted in were each sales on million versus period, to with continued X.X% offset which increased last of last sequentially amortization the QX. QX Total million were by of to compared year. Customers more $XX.X impact compared as the in to retail, return expenses a improving morning, did the year, in were last to to compared QX to and first-cost good refer store drove year. encouraging versus we operating rates as which, operations. selling inflation, company higher full month positive the quarter profit XXXX, down the quarter direct sales compared Thank primarily of lower and were of incremental $XXX driven sales company million, a million X%. in second costs overhead, results, by online to primarily $XX.X last strong quarter mixed up QX of versus sales full and compared on were adjusted $XX impact and QX QX sales sales, XX.X%, year-over-year was Total we total offset units Increases depreciation XXX transaction, XXXX. percentage lower XXXX. XX% sales continued by second quarter. Compared down due quarter margin costs X% in comp. driven of Unit once fiscal than and by better Store were sold markdown XXXX, per press sales Overall, was gross in quarter everyone. the EBITDA. Direct sequentially the offset with the some units compared signs down QX to of see a for sold. the general today's fewer solid wage abatement for million basis the million total

to operating ABL. the flow. our million is generated we operations, quarter, cash significant second hallmark the and In A the ending cash model Turning $XX million from of borrowings generates. in cash cash against $XX flow of it with X

quarter, down the XXXX, those due in QX result, the on year inventory last half. Inventories XX% we We end higher and us, in as mentioned last delayed expect of are a and largely the last QX actuals. supply issues year, tight year. of to compared at inventory which as year-over-year half in impact this reported expenditures more largely year that last about of year. Capital chain in now QX to levels end time were behind $X of the Conditions XXXX the year, disruption the year improved line about last levels of late at being to quarter end last focus this year to resulted is inventory and or back with million began continue QX first shipments in the last be versus compared million were to $X.X on management, in overall on

the quarter store we stores. QX, and X During California, relocated ended in Sacramento, with XXX

first technology completing capabilities in foundation We selling. over with rollout progress to and company. project XX% our and the are the improvement the upgrade the and fleet. a is POS and checkout, of service continue to in live initiative, employees third which look the strategy forward the broader also of the We during excited now omnichannel great very the is quarter. The of make to new POS technology by Customers phase

now or operational in kicking will of focus upgrading we profitable POS the the management significantly total driving returns our enhance on near delivering These the and the capabilities project, order growth and OMS. phase, the complete we we replacing As as system, business next shareholder includes are new future. which off systems

Turning outlook. to our

in continued quarter through in mentioned, Claire we the are has experienced August. the As that second improvement encouraged trend

we our sentiment with take the seeing for outlook a While the year. respect green we continue prudent are remainder shoots and to to to respect with of approach customer responsiveness,

year million. we expect the versus of be quarter, we we to prior comparisons in fourth last week. fourth third the range expect as sales benefit $XX $XX the as easier and quarter adjusted single and million a pressured in For digits, than to reminder, said third EBITDA the profitability in and low last be be more down to XXXX XXrd quarter QX to of year quarter's quarter, the the given to And the in compared

percent a and We year. in now better-than-expected the to half full expect year, updating to approximate current low million the of EBITDA single from digits expectations the are for as be $X the QX performance the benefit guidance our adjusted year, XXrd compared down For reflect the second to last an including we week.

$XX Regarding you, capital, store to now count we respect I year the And the to store about the investments with operator capital, hand the end still project. Thank we and POS OMS focused it of back expect technology, flat to on for questions. of project completion spend expect million to stores' count, XXXX. kickoff will with full and the

Operator

of first Instructions] question comes line Telsey Group. Telsey Advisory Your the [Operator from of Dana

Dana Telsey

how It the And Mark, you are see the on them? And made being to on that in encouraging. seeing customer that and much is of capturing improvement was results. digital the the of nice through impressive. that investments the see stores? that customer is in lower certainly that you appeals AUC, Did certainly going data margin there sounds are the you move in what Congratulations to more margin do lastly, enhance technology magnitude improved. business Claire, younger that like the to what's terms How gross due very business, What you both and the out as playing in you the forward? And quarter, profile? that mentioned, very and

Claire Spofford

Thank the I'll then latter. hand it first the part Mark take you, Dana. over for to and

a was often big time in did of price see very and full-price a So course as our quarter, improvement nice month sale Interestingly, sales. particularly quarter, period. period the know, it's July where, that's yes, full you typically, a the strongest of we in over the

and So what out did well your regard quarter. to we to a a digital the that played customers end standpoint about lot are acquisition the that the really we the spectrum, new-to-brand of pleased younger in strategy saw from the quarter we see comment of progression. With over

our assortment core by the the creatively creatively standpoint, led addition, sizing the of well a parts and and really of saw In Wearever target younger as product messaging a assortment, response, our we -- our from and nice elements both to sub-brand. them pointed on but messaging wear-to-work curated that as inclusive also

Mark Webb

margin a regarding gross the just Dana, margin, And the quarter. healthy in gross very

better was driven That year. saw, call, quarter, a into freight the the quarter. the by to mentioned second -- That does did benefit start year-over-year which is back As benefit we first on then on the basis. minimize weighted really the really we increase half we the and of the of freight to

objective, on then a of technology, respect a operating underneath negotiations, more move our primarily profile is the with of place negotiate and company your think, omni that rates as on on margin to we is see And that to operational behalf to for we've to it are raw AUCs, to very first-cost cotton, there for that as healthy said the AUCs, to and at us. And There great the really current quarter more of better really underlying and was us And us yield work for achieving be I to benefits teams then the from so. we the in the better allowing the model. margin should starting forward, we be implement promotional of offset environment result materials, inherent what relates that, mentioned we've late underlying the just capabilities. some benefit which question been opportunities doing

it we margin growth. more another profile to us drive now to have for heavily managing the view available we profile whatever into profitable to levers lean profitable as driving reality, margin And growth. using In that us with current opportunity

as is, over it in well to excited completing fleet the the as going see now, XX% QX. of POS project very in So

which into and driving of the about now growth. to great big, of is on And puzzle. ability really to some OMS, important another Moving these very part feeling that the investments lean make

Dana Telsey

how you the doing mentioned on it. as moving in third, flow direction, update mindful The cash quarter, that to thinking follow-up. the Any the year? nice and further we there? third for Got in and about pickup quarter certainly also of the be obviously, And just then you're anything it is a fourth cash should X fourth nicely. flow the compared And

Mark Webb

a thinking The cash, part our generation. flow. Yes. really, of the big a it's free It's pretty significant model cash cash when operating mean generates operating I flow about straightforward story. model

We year, refinanced have, debt. our earlier this successfully

So our a that was big on initial call cash.

generate drive into really the map. think in investing any you're execute business, us with opportunities our and have that can technology start really shareholder to to even sufficient about returns. think we investments we seeing road step And cash as Now to start drive to total that strategic that about how other

mentioned then challenging is in obviously view, a just on to well. and something So the to to that's third QX, definitely a benefit our some total XXrd radar, time. And guidance profit with the are year-over-year our easier to comparative quarter more about we comparisons as nothing than we that cash and is on today, year to basis, specifically but part over about QX that's continue a respect had thinking our drive QX, just the last utilize value options had because in in talk to comparison week

Operator

B. Your of the next from question Jeff comes of line Riley. Lick

Jeffrey Lick

great then probably was and and is a strategies wondering if stores and obviously the your about anything looks from QX. external the I'm is? took quarter terms a on matrix, can the how there glean you from direct, and I kind just you basics in into in your wondering, the of setup Congrats progressed business stronger were environment stores as little like thought and of it QX, or then fashionable a it quarter.

Claire Spofford

Jeff. Yes. Thanks,

the role how business channel to seen a excited talk of sales sense balanced balance in very direct in full there as is for of channel are few nice comparison a our how full-price more plays we split in did the we in full really the And business in the our And as the some of was. We've XX% today with direct and than of file much see and performance well. it channel. it sales. model price different quarters, in the we nice throughout of saw said, being price that we the model terms of the growth frequently about So about appreciate we strong really it's direct progression quarter. coming ago direct now the than years And the very a us customer stores a

Jeffrey Lick

clarify of side. through I some or of the quarter -- good your just if then little in gross some mean an wondering to to just QX, just it And any others, results Obviously, I control. -- curious, mean, -- be and be your of your seems the that? curious, you are little And aspects strength there compared paying thoughts well, seeing like might things of a kind that I'm consumer on then you product obviously, a I follow the seems bit customer in to was I'm outlier strategy you're in core are just to just as margin. benefits your had progressed maybe stronger. just

Claire Spofford

Sure.

QX yes, on cite and relative frequently real profile her loyalty strength in we and So One business. touched of that at think of as is the her think, our our of all X you that resistance as to QX, of Mark coming customer things well. and And I benefit we're as the out that, -- seeing of I the the brand. all start commented, of

definitely a balanced. assortments so strong. product she why are then of very hallmarks hallmark is the definitely think brand is those And So are -- I our

intend that the half she's certainly third of throughout consumer what that a looking the strong that the I been for, the from and been year, for has beyond. newness and first we into continue basic And fashion quarter to the also looking but think we for. have a standpoint, both really novelty of strong core is franchise understanding and and our the

So model. then there's in business the the customer a There's as assortment well. balance great a balance great business and the in driving

Jeffrey Lick

you seeing a inventory -- of margin price I'm where just Or chase your goods a to is as go wondering, sales sold as little more than is you now ever follow-up, gross as than dollars just it back a efficient that Fascinating. do versus selling is here lower chasing inventory you're might a better gross margin full gross it's could And prepandemic. ratio margin -- more than dollars? having or the to see think the percent? scenario cost relates to of you

Claire Spofford

intend with pointed profitable in place, continue not expense model cash. and have begin drive in investing inventory as as can of we go prudently worked we've of that to expense margins, like be Mark but do margin. Yes. we that feel our forward, to so profile will this foundation the But margin really strong We business at and this We at that absolutely we very earning the hard has into maintained that strong not generation we growth, and, create. but now that of that cautiously way the strong gross investment the to we out, to believe invest

Mark Webb

the of oversimplifying Jeff, main right? just risk X it, -- at there and Inventory are components. management discipline,

learning down post-COVID, little at stepping why about cetera, XX% as -- the teams as of that that, into end -- disruption come rates supply But it's equation. The chain The through really just of that we then buy, But a reporting, stabilizing et buying in-transits, return direct. and lot the and that The both well, through and It's preseason impact flattish I color -- of put will of bit about buy more should management the areas first these more more the the are And of lot we last growth. on and yield. start Claire bit and really, of and in QX. the COVID of the yield a through the prudence mentioned, in those but continue the inventory range. of as as of side inventory a of year. business, little is we're management second remarks, to the lean to a come the start think put disciplined benefit to with the we we're in is in-season profitable and in-season sides in we is to the we're and much business, to drive planning the go-forward we some focused place is the mentioning excited that that some profile discipline into my Claire

Jeffrey Lick

very impressive a quarter. operational on Congrats

Operator

today's this are time. conference no with you conference joining There concludes questions at that, thank for And further today's we call. call. This

disconnect. may now You

J.Jill (JILL) 31 Aug 232024 Q2 Earnings call transcript