QUINCY, Mass.--(BUSINESS WIRE)--J.Jill, Inc. (NYSE:JILL) today announced financial results for the second quarter ended August 1, 2020.

James S. Scully, Interim Chief Executive Officer of J.Jill, Inc. stated, “During the second quarter we continued to navigate through the challenges presented from the COVID-19 pandemic. With the majority of our stores temporarily closed through the first half of the quarter, our teams focused on driving sales through our direct to consumer channel. We also continued to tightly manage expenses as well as our working capital needs. I am pleased with our disciplined approach to inventory management and believe we are taking the right actions to further strengthen our financial position. I am proud of all of our teams for their hard work and dedication to J.Jill, and we look forward to driving further progress as we move through the balance of the year and beyond.”

For the second quarter ended August 1, 2020:

• The Company ended the second quarter of fiscal 2020 with $31.8 million in cash.
• Inventory at the end of the second quarter of fiscal 2020 decreased to $64.2 million compared to $70.0 million at the end of the second quarter of fiscal 2019.
• Total net sales for the thirteen weeks ended August 1, 2020 were $92.6 million compared to $180.7 million for the thirteen weeks ended August 3, 2019.
• Direct to consumer net sales represented 71.6% of total net sales, compared to 42.6% in the second quarter of fiscal 2019.
• Gross profit was $55.0 million compared to $105.3 million in the second quarter of fiscal 2019. Gross margin was 59.4% compared to 58.3% in the second quarter of fiscal 2019, which reflected the impact of actions taken in 2019 to clear excess inventory.
• SG&A was $76.9 million compared to $102.6 million in the second quarter of fiscal 2019. SG&A as a percentage of total net sales was 83.0% compared to 56.8% in the second quarter of fiscal 2019. In the second quarter of fiscal 2020, SG&A included $6.9 million of non-recurring expense directly incurred in response to the COVID-19 pandemic and other legal and advisory costs offset by a benefit of $0.4 million related to an adjustment associated with the estimated costs of permanently closing certain retail locations, while in the second quarter of fiscal 2019, SG&A included non-recurring income of $0.7 million resulting from the benefit of insurance proceeds which was partially offset by restructuring costs.
• Loss from operations was $21.0 million compared to a loss of $94.8 million in the second quarter of fiscal 2019. Loss from operations in the second quarter of fiscal 2020 included a benefit of $0.9 million, which represents a reduction of an impairment charge recorded in the first quarter and relates to an adjustment of the lease liability caused by permanently closing certain retail locations. The second quarter of fiscal 2019 included $97.5 million of impairment charges.
• Adjusted Income from Operations*, excluding the non-recurring items and impairment entries incurred in both the second quarter of fiscal 2020 and 2019, was a loss of $15.4 million compared to income of $2.0 million in the second quarter of fiscal 2019.
• Interest expense was $4.2 million compared to $5.0 million in the second quarter of fiscal 2019.
• Income tax benefit was $6.7 million compared to a benefit of $3.1 million in the second quarter of fiscal 2019, and the effective tax rate was 26.6% compared to 3.1% in the second quarter of 2019.
• Net loss was $18.5 million compared to a loss of $96.7 million in the second quarter of fiscal 2019.
• Net loss per share was $0.41 compared to a loss of $2.21 in the second quarter of fiscal 2019, including the impact of non-recurring items. Excluding these impacts Adjusted Loss per Share* in the second quarter of fiscal 2020 was $0.31 compared to adjusted loss per share of $0.05 in the second quarter of fiscal 2019.
• Adjusted EBITDA* for the second quarter of fiscal 2020 was a loss of $6.2 million, compared to income of $12.6 million in the second quarter of fiscal 2019.
• The Company closed five stores in the second quarter of fiscal 2020 and ended the quarter with 281 stores.

For the twenty-six weeks ended August 1, 2020 :

• Total net sales for the twenty-six weeks ended August 1, 2020 were $183.6 million compared to $357.2 million for the twenty-six weeks ended August 3, 2019.
• Direct to consumer net sales represented 66.6% of total net sales compared to 42.3% in the twenty-six weeks ended August 3, 2019.
• Gross profit was $105.2 million compared to $221.6 million in the twenty-six weeks ended August 3, 2019. Gross margin was 57.3% compared to 62.0% in the twenty-six weeks ended August 3, 2019.
• SG&A was $164.8 million compared to $208.1 million in the twenty-six weeks ended August 3, 2019. In the twenty-six weeks ended August 1, 2020, SG&A included $9.1 million of expense directly incurred in response to the COVID-19 pandemic and other legal and advisory costs offset by a benefit of $0.4 million related to an adjustment to the estimated costs of permanently closing certain retail locations. In the twenty-six weeks ended August 3, 2019, SG&A included non-recurring income of $0.7 million resulting from the benefit of insurance proceeds which was partially offset by restructuring costs.
• Loss from operations was $110.7 million compared to a loss of $84.0 million in the twenty-six weeks ended August 3, 2019. 2020 loss from operations included $51.1 million of impairment charges for goodwill and other intangible and long-lived assets compared to $97.5 million of impairment charges in fiscal 2019.
• Adjusted Income from Operations*, excluding the non-recurring items and impairment entries incurred year-to-date in fiscal 2020 and 2019, was a loss of $50.9 million compared to income of $12.8 million in the second quarter of fiscal 2019.
• Interest expense was $8.9 million compared to $10.0 million in the twenty-six weeks ended August 3, 2019.
• Income tax benefit was $30.8 million compared to $1.6 million in the twenty-six weeks ended August 3, 2019, and the effective tax rate was 25.8% compared to 1.7% in the twenty-six weeks ended August 3, 2019.
• Net loss was $88.8 million compared to a loss of $92.4 million in the twenty-six weeks ended August 3, 2019
• Net loss per share was $1.99 compared to a net loss of $2.12 in the twenty-six weeks ended August 3, 2019, including the impact of one-time items. Excluding these impacts Adjusted Loss per Share* for the twenty-six weeks ended August 1, 2020 was $0.96 compared to adjusted income per share of $0.05 for the twenty-six weeks ended August 3, 2019.
• Adjusted EBITDA* in the twenty-six weeks ended August 1, 2020 was a loss of $32.1 million compared to income of $34.1 million in the twenty-six weeks ended August 3, 2019.

* Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP Net Income to Adjusted EBITDA, Adjusted Income from Operations and Adjusted Net Income” for more information.

Outlook

The impact of the COVID-19 pandemic and the pace at which there are new developments, locally and globally, has created a great deal of uncertainty. Consequently, the Company is not providing financial guidance at this time but continues to expect to end the year with approximately 275 stores, with the majority of additional closings completed early in the third quarter. The Company continues to expect total capital spend in fiscal 2020 to be approximately $5.0 million.

Recent Developments

Following the end of the Company’s fiscal first quarter, on June 15, 2020, the Company announced that it had fallen out of compliance with certain covenants set forth in its ABL and term loan credit facilities. Beginning on June 15, 2020, the Company entered into two Forbearance Agreements (the "Forbearance Agreements") with the lenders under its ABL and term loan credit facilities with respect to the aforementioned noncompliance. Subsequently, the Forbearance Agreements were extended with the latest extension through September 26, 2020.

On September 1, 2020, the Company announced it entered into a Transaction Support Agreement (“TSA”) with lenders holding greater than 70.0% of the Company’s term loans (“Consenting Lenders”) on the principal terms of a financial restructuring (“Transaction”) that would result in a waiver of any past non-compliance with the terms of the Company’s credit facilities and provide the company with additional liquidity.

Mark Webb, Chief Financial Officer of J.Jill, Inc. commented, “We are very pleased that we have reached an agreement with more than 70.0% of our lenders and a majority of our shareholders that we expect will strengthen our financial position and better enable us to move forward in driving long-term growth for J.Jill.”

If the Transaction is consented to by the requisite term loan lenders, the Transaction will be consummated on an out-of-court basis. The out-of-court Transaction would extend the maturity of certain participating debt by 2 years, through May 2024, enabling the Company to strengthen its balance sheet and better position itself for long-term growth. The Company is working actively with the Consenting Lenders to obtain the necessary consents. In the event that the Transaction does not receive the required consents, the parties to the TSA have agreed to a prepackaged plan of reorganization under Chapter 11 of the United States Code (the “In-Court Transaction”) the key terms of which have been negotiated, including additional financing during the Chapter 11 process. While the Company hopes to receive the required consents to execute the out-of-court Transaction, the Company anticipates that the In-Court Transaction would be a swift process in which all vendor claims would be unimpaired and paid in full, and from which the Company would emerge with a strong and healthy balance sheet.

Please refer to http://investors.jjill.com for these prior announcements as well as relevant filings.

About J.Jill, Inc.

J.Jill is a premier omnichannel retailer and nationally recognized women’s apparel brand committed to delighting customers with great wear-now product. The brand represents an easy, thoughtful and inspired style that reflects the confidence of remarkable women who live life with joy, passion and purpose. J.Jill offers a guiding customer experience through about 280 stores nationwide and a robust e-commerce platform. J.Jill is headquartered outside Boston. For more information, please visit www.jjill.com or http://investors.jjill.com. The information included on our websites is not incorporated by reference.