J. Jill swings to a loss

Dive Brief:

J. Jill on Tuesday reported that second quarter net sales rose by a million dollars to $180.7 million from $179.7 million in the year-ago quarter.
Comparable sales including e-commerce fell 1.2%, according to a company press release. That beat the Refinitiv expectation for a 2.3% comp decline, per a note emailed to Retail Dive. E-commerce rose year over year to 42.6% of total net sales from 40.9%.
The company swung to a loss of $96.7 million from income of $10.5 million in the year-ago quarter, including non-recurring SG&A expenses. Excluding those, adjusted net loss was $2.2 million compared to adjusted net income of $10.7 million in the quarter last year. Gross profit fell to $105.3 million from $116.7 million in the year-ago quarter, as gross margin fell to 58.3% from 64.9% last year, as markdowns cleared inventory.

Dive Insight:

Things have been looking dire for J. Jill. The retailer's shares have plummeted 72% year to date (as of Aug. 16), according to a note from P.J. Solomon emailed to Retail Dive. Shares rose early Tuesday on the company's much cheerier second-quarter report, though they began to slide again at press time.

Expenses are increasingly in check, executives told analysts Tuesday morning. The company has downsized its headquarters, both its space and headcount, and is otherwise streamlining its operations, including shortening its production calendar. More importantly, though, it's making "course corrections" to merchandise, including color, CEO Linda Heasley said.

The current assortment is "back to what J. Jill stands for," she said, adding, "I see a nice push forward in the first quarter of next year going into the next year. So stay tuned. I think you're going to appreciate what you see coming up."

The company is seeing healthy store traffic and is opening more stores than it's closing. J.Jill opened four stores and closed one in the second quarter, ending the period with 286, according to its release. "Traffic has not been a problem for us in the store," CFO Mark Webb told analysts, calling that "a signal of the strength of the brand and the customer connection." Conversion in the store remains a challenge, however.

E-commerce sales rose 5%, and Webb said the company is "pleased with that result." Heasley said that online engagement through email and website improvements were responsible for that, and noted that mobile is its fastest-growing channel, although that too is "most challenged in conversion." New customers are most likely to come aboard via online, she noted.

"With some of the merchandising, visual merchandising changes, and product ... we think there's some upside here," she said. "The good news for us is we have the traffic."

The company is moving some sourcing outside of China in response to tariffs but remains concerned, if "cautiously optimistic," about the impact tariffs have on consumer sentiment, Webb said.