US' J Jill's H1 FY25 net sales fall 2.9%, margins narrow

The gross profit declined to $105.4 million from $109.4 million, with gross margin compressing to 68.4 per cent versus 70.5 per cent last year. Selling, general and administrative (SG&A) expenses rose to $88.6 million from $86.3 million, weighing further on operating performance.

The operating income fell sharply to $16.8 million, down from $23 million, with operating margin at 10.9 per cent compared to 14.8 per cent. On an adjusted basis, income from operations stood at $19.6 million against $24.9 million in Q2 FY24.

The interest expense decreased to $2.7 million from $3.7 million, while interest income remained flat at $0.5 million. The income tax provision rose to $4 million compared to $3.1 million, with an effective tax rate of 27.7 per cent.

The net income improved to $10.5 million from $8.2 million last year, aided by the absence of debt extinguishment charges that impacted Q2 FY24. Diluted earnings per share rose to $0.69 from $0.54, though adjusted diluted EPS slipped to $0.81 from $1.05. The adjusted EBITDA came in at $25.6 million versus $30.2 million, with margin declining to 16.6 per cent from 19.4 per cent.

“During the second quarter we saw sequential improvement in sales trends each month as traffic improved and customers responded positively to the summer sale period. In line with our operating model disciplines, we took actions in season to enter the second half of the year with inventories more aligned with current trends, and we are pleased with how our teams are continuing to navigate a very dynamic environment,” said Mary Ellen Coyne, chief executive officer (CEO) and president of J Jill, Inc.

“My initial assessment has reinforced my conviction in J Jill’s operating model and the valuable customer demographic we serve. As we look ahead, we are focused on realizing our brand’s untapped potential to expand our customer file by executing on a strategic framework focused on evolving our product assortment, enhancing our customer journey, and improving the way we work. We're excited to write the next chapter—building a stronger J Jill, capitalizing on the areas that will drive sustainable, profitable growth that we believe will deliver enhanced shareholder value,” added Coyne.

For the first half (H1) of FY25, net sales declined 2.9 per cent to $307.6 million. Comparable sales were down 3.5 per cent, with DTC revenue, representing 46.6 per cent of sales, decreasing 3.8 per cent. The gross profit fell to $215.7 million from $227.1 million, and gross margin narrowed to 70.1 per cent from 71.7 per cent.

SG&A increased to $179.7 million from $175.4 million, accounting for 58.4 per cent of net sales compared to 55.4 per cent a year earlier. The operating income dropped to $35.8 million from $51.4 million, with margin down to 11.7 per cent from 16.2 per cent. Adjusted income from operations totalled $41.2 million, compared with $54.5 million last year. Adjusted EBITDA stood at $52.9 million, down from $65.8 million, with margin at 17.2 per cent versus 20.8 per cent.

The net income for H1 was $22.2 million, though the prior-year figure included $8.6 million in debt extinguishment costs. Diluted EPS declined to $1.45 from $1.69, while adjusted EPS fell to $1.69 from $2.27.

The company closed five stores during the first half, bringing the store base to 247 compared to 244 in the same period last year.

For the third quarter (Q3) of FY25, J Jill expects net sales to be approximately flat to down low-single digits YoY, with comparable sales projected to decline in the low to mid-single digits. The adjusted EBITDA is forecast in the range of $18 million to $22 million, incorporating about $5 million in incremental tariff-related costs, net of vendor offsets.

For the full fiscal 2025, the company maintains guidance of capital expenditures between $20 million and $25 million and net new store growth of one to five locations.

ALCHEMPro News Desk (SG)