J. Jill Inc. (JILL) released its second-quarter earnings report, revealing a mixed performance. The company’s sales slipped by 0.9% year-over-year, reaching $155.24 million, surpassing the analyst consensus estimate of $154.23 million. However, this positive surprise was tempered by a decline in gross profit and operating margin.
Despite the overall sales dip, J. Jill saw some encouraging trends. Comparable sales across the company rose by 1.7%, demonstrating the company’s ability to attract customers. Direct-to-consumer net sales climbed a notable 3.6% year-over-year, representing 47.1% of total sales. This growth highlights the increasing popularity of online shopping among J. Jill’s customer base.
The company’s adjusted earnings per share (EPS) also exceeded expectations, coming in at $1.05 compared to the consensus estimate of $0.91. This positive EPS performance indicates that J. Jill is managing its expenses effectively and generating profits despite the challenging retail environment.
However, the company’s financial performance wasn’t entirely positive. Gross profit decreased by 2.7% year-over-year to $109.39 million, driven by a contraction in gross margin by 120 basis points to 70.5%. This suggests that the company is facing pressure on pricing or is experiencing higher costs of goods sold.
Operating margin also contracted by 307 basis points to 14.8%, resulting in a 17.9% decline in operating income to $23.022 million. These figures underscore the challenges J. Jill is facing in maintaining profitability amidst increasing expenses and potentially declining consumer demand.
Looking ahead, J. Jill lowered its financial outlook for 2024. The company expects net sales to be flat to up 1% compared to fiscal 2023, a reduction from its previous guidance of 1% to 3% growth. Adjusted EBITDA is now projected to decline by 4% to 9%, down from the previous forecast of a 1% to 3% decrease.
This revised guidance reflects the company’s cautious approach to the current market conditions. Despite the challenges, J. Jill remains committed to operating with discipline, focusing on maximizing margin performance and generating substantial cash flow.
In a statement, Claire Spofford, J. Jill’s President and CEO, acknowledged the shifts in consumer behavior and their impact on the company’s performance. Spofford expressed confidence in the company’s ability to navigate these changes while maintaining operational discipline and delivering healthy margins.
Despite the lowered guidance, J. Jill’s commitment to streamlining operations and adapting to evolving consumer preferences suggests that the company is strategically positioning itself for future growth.
JILL shares were down 6.13% at $30.27 at the last check on Wednesday.
