QUINCY, Mass.--(BUSINESS WIRE)--J.Jill, Inc. (NYSE:JILL) today announced financial results for the third quarter ended October 31, 2020.

James S. Scully, Interim Chief Executive Officer of J.Jill, Inc. stated, “Our third quarter results represent sequential topline improvement as the majority of our stores were reopened for the entire period. Direct sales were up 4% for the quarter and penetration remained healthy at over 60% of total sales. We have continued to be disciplined with regards to cost and inventory management, and we took aggressive actions to effectively clear units during the quarter to better align our inventory position with current demand. These actions, along with our improved financial flexibility through our recent agreement with our lenders, better position J.Jill as we continue to focus on driving profitable growth. As we embark on our next chapter, we are pleased to welcome our permanent CEO, Claire Spofford, who will join us early next year, and brings deep knowledge of J.Jill’s loyal customer base as well as a track record of evolving brands into profitable, digitally-driven omnichannel businesses.”

For the third quarter ended October 31, 2020:

• The Company ended the third quarter of fiscal 2020 with $9.2 million in cash and $37.3 million of total availability under its revolving credit agreement.
• Inventory at the end of the third quarter of fiscal 2020 decreased 17.0% to $67.6 million compared to $81.4 million at the end of the third quarter of fiscal 2019.
• Total net sales for the thirteen weeks ended October 31, 2020 were $117.2 million compared to $166.1 million for the thirteen weeks ended November 2, 2019.
• Direct to consumer net sales represented 63.3% of total net sales, compared to 43.0% in the third quarter of fiscal 2019.
• Gross profit was $69.0 million compared to $106.9 million in the third quarter of fiscal 2019. Gross margin was 58.9% compared to 64.4% in the third quarter of fiscal 2019. The year over year gross margin decline was primarily driven by actions taken in the quarter to clear excess inventory.
• SG&A was $92.2 million compared to $98.0 million in the third quarter of fiscal 2019. In the third quarter of fiscal 2020, SG&A included $13.3 million of expense primarily the result of legal and advisory costs related to the debt restructuring agreements with lenders and costs directly incurred in response to the COVID-19 pandemic offset by a benefit of $0.6 million related to an adjustment to the estimated costs of permanently closing certain retail locations. Excluding these items, SG&A as a percentage of total net sales was 67.7% compared to 59.0% in the third quarter of fiscal 2019.
• During the third quarter of fiscal 2020, the Company recognized impairment charges of $0.9 million related to long-lived assets associated with retail stores.
• Loss from operations was $24.1 million compared to income of $9.0 million in the third quarter of fiscal 2019.
• Adjusted (Loss) Income from Operations*, excluding the non-recurring items and impairment charges incurred in the third quarter of fiscal 2020, was a loss of $10.4 million compared to income of $9.0 million in the third quarter of fiscal 2019.
• Interest expense was $4.8 million compared to $4.8 million in the third quarter of fiscal 2019.
• Income tax benefit was $7.3 million compared to expense of $1.8 million in the third quarter of fiscal 2019, and the effective tax rate was 24.0% compared to 42.5% in the third quarter of 2019.
• Net loss was $23.2 million compared to income of $2.4 million in the third quarter of fiscal 2019.
• Net loss per share was $2.52 compared to income of $0.27 in the third quarter of fiscal 2019, including the impact of non-recurring items and adjusted for the 5-for-1 reverse stock split that was effective November 9, 2020. Excluding the impact of non-recurring items Adjusted Loss per Share* in the third quarter of fiscal 2020 was $1.30 compared to Adjusted Income per Diluted Share of $0.34 in the third quarter of fiscal 2019.
• Adjusted EBITDA* for the third quarter of fiscal 2020 was a loss of $1.6 million, compared to income of $19.6 million in the third quarter of fiscal 2019.
• The Company closed 5 stores in the third quarter of fiscal 2020 and ended the quarter with 276 stores.

For the thirty-nine weeks ended October 31, 2020:

• Total net sales for the thirty-nine weeks ended October 31, 2020 were $300.8 million compared to $523.3 million for the thirty-nine weeks ended November 2, 2019.
• Direct to consumer net sales represented 65.3% of total net sales compared to 42.5% in the thirty-nine weeks ended November 2, 2019.
• Gross profit was $174.2 million compared to $328.5 million in the thirty-nine weeks ended November 2, 2019. Gross margin was 57.9% compared to 62.8% in the thirty-nine weeks ended November 2, 2019.
• SG&A was $257.8 million compared to $306.1 million in the thirty-nine weeks ended November 2, 2019. In the thirty-nine weeks ended October 31, 2020, SG&A included $23.0 million of expense primarily the result of legal and advisory costs related to the debt restructuring agreements with lenders and costs directly incurred in response to the COVID-19 pandemic offset by a benefit of $1.0 million related to adjustments to the estimated costs of permanently closing certain retail locations. Excluding these items, SG&A as a percentage of total net sales was 78.4% compared to 58.6% in the thirty-nine weeks ended November 2, 2019.
• During the thirty-nine weeks ended October 31, 2020, the company recognized impairment charges of $52.0 million associated with goodwill, other intangible assets and other long-lived assets compared to $97.5 million in the thirty-nine weeks ended November 2, 2019.
• Loss from operations was $135.7 million compared to a loss of $75.0 million in the thirty-nine weeks ended November 2, 2019.
• Adjusted (Loss) Income from Operations*, excluding the non-recurring items and impairment charges incurred year-to-date in fiscal 2020 and fiscal 2019, was a loss of $61.6 million compared to income of $21.8 million, respectively.
• Interest expense was $13.6 million compared to $14.9 million in the thirty-nine weeks ended November 2, 2019.
• Income tax benefit was $38.5 million compared to expense of $0.1 million in the thirty-nine weeks ended November 2, 2019, and the effective tax rate was 25.5% compared to -0.1% in the thirty-nine weeks ended November 2, 2019.
• Net loss was $112.5 million compared to a loss of $90.0 million in the thirty-nine weeks ended November 2, 2019
• Net loss per share was $12.49 compared to a net loss of $10.31 in the thirty-nine weeks ended November 2, 2019, including the impact of one-time items. Excluding the impacts of nonrecurring items, Adjusted (Loss) Income per Share* for the thirty-nine weeks ended October 31, 2020 was a loss of $6.10 compared to income of $0.58 for the thirty-nine weeks ended November 2, 2019.
• Adjusted EBITDA* in the thirty-nine weeks ended October 31, 2020 was a loss of $33.9 million compared to income of $53.7 million in the thirty-nine weeks ended November 2, 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 expects to end the year with approximately 270 stores. The Company continues to expect total capital spend in fiscal 2020 to be approximately $5.0 million.

Recent Developments

On September 30, 2020, in accordance with the Transaction Services Agreement (“TSA”), The Company entered into agreements with its lenders creating an amended Term Loan, new Priming Loan and a subordinated facility. The agreements include the issuance of Penny Warrants. The details of these agreements can be referenced in our Form 10-Q filed today, December 10, 2020.

Separately, on October 7, 2020, the Company announced the appointment of Claire Spofford as Chief Executive Officer, effective no later than February 15. She will also become a member of the Board of Directors. Jim Scully will remain Interim CEO to ensure a smooth transition of the role. Spofford a veteran retail executive with more than 20 years of experience, most recently served as President of Cornerstone Brands.

Additionally, on November 4, 2020, the Company announced a 1-for-5 reverse stock split effective November 9, 2020. The Company’s shareholders received one share for every five shares held prior to the effective date.

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 275 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.