Dive brief:
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J. Jill reported Thursday that the second trimester net sales fell 49% to $ 92.6 million up from $ 180.7 million in the period last year, with direct-to-consumer sales reaching 71.6%, up from 42.6% last year.
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Gross margin fell to $ 55 million from $ 105.3 million last year, as gross margin edged up to 59.4% from 58.3%, reflecting markdowns to clear inventory last year . Inventories at the end of the quarter were down to $ 64.2 million from $ 70 million a year ago. Adjusted EBITDA was a loss of $ 6.2 million, down Year after year with income of $ 12.6 million.
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Since the second quarter of last year included $ 97.5 million in depreciation charges, the retailer was among the few to cut losses during the period. Net loss decreased to $ 18.5 million from $ 96.7 million in 2019. Operating loss, which includes a $ 0.9 million benefit from permanent store closures, fell to $ 21 million compared to an operating loss of $ 94.8 million last year.
Dive overview:
Time is running out for J. Jill, who had Tuesday announced a deal with lenders holding 70% of its debt, which could avoid a bankruptcy filing.
This deal requires other consents, however, and every day that goes by without it being finalized brings the womenswear retailer one step closer to bankruptcy protection.
With most of its stores temporarily closed for half of the quarter, J. Jill has worked to boost e-commerce and cut spending, which has paid off, according to a statement from the interim CEO. James Scully. “I am pleased with our disciplined approach to inventory management and believe we are taking the right steps to further strengthen our financial position,” said Scully. “I am proud of all of our teams for their hard work and dedication to J. Jill, and we look forward to making further progress throughout the rest of the year and beyond.”
Even without the additional challenges brought on by the COVID-19 pandemic, which not only forced stores to close but also severely drained demand for clothing, J. Jill faltered. Linda Heasley stepped down as CEO at the end of last year, as store compositions continued to decline.
While some clothing retailers saw sales and margins improve significantly as the stores reopened, J. Jill has so far not been so fortunate. With a customer base made up mostly of older women, the retailer is unlikely to see much benefit from a back-to-school year which, while greatly reduced due to the pandemic, is helping some retailers. reverse steep declines seen earlier in the year.
J. Jill closed five stores in the second quarter, ending with 281. The company plans to end the year with about 275 stores, with most of the other permanent closings taking place in the current quarter, according to its release.