J. Jill, Inc.

Q1 2021 Earnings Conference Call

6/8/2021

spk_0: thank you for listening to the judge ill first quarter the twenty twenty one earnings commentary claire's buffered president and chief executive officer and marc webb executive vice president and chief financial officer will provide further remarks on the company's first quarter of fiscal twenty twenty one results and may first twenty twenty one which were announced that the press release dated june eighth twenty twenty one into today his remarks be no question and answer session i need to remind you that certain comments made during these remarks may constitute forward looking statements and are made pursuant to and within the meaning of the safe harbor provisions of the private securities litigation reform act of nineteen ninety five as amended such forward looking statements are subject to both known and unknown risks and don't certain views that could cause actual results to differ materially from such statements those risks and uncertainties are described in the press release and jake chills as easy filing the forward looking statements made on the recording or as of june eighth twenty twenty one and khl did not undertake any other game one to update these forward looking statements finally teacher may refer to certain adjusted or non gaap financial measures during these remarks a reconciliation schedule so in the gap person non gaap financial measures is available in a press release is june eight twenty twenty one if you did not have a copy of days press release you may obtain one by visiting the best religious page of the website at churchill thought com i'll and i'll turn the right
spk_1: over declare
spk_2: thank you all the morning everyone
spk_0: our first quarter results reflect encouraging progress against the law for their focus on strike the operating model and that is healthy margin recovery
spk_2: like many in retail we are pleased to participate in the strong rebound and consumer activity the spring with the accelerated roll of vaccination and the listing of many covert nineteen related researching the cross the country
spk_0: for the quarter with delivered pop one both of forty two percent compared to last year balance the cloth our retail and directional in addition to the benefit of anniversary last year's temporary store closures filled growth with driven by healthy conversion and full price selling invoking up
spk_2: the result coupled with continued disciplined in the toy management and a more refined promotional cadence so strong both margin expansion for the period leading to adjusted ebitda of seventeen million dollars for the first quarter
spk_0: while traffic continued to recover our customers showing us you'd really excited to support us in stores and online we saw great response to our product departments the spring customers both existing and new a really engaging with us and are reacting to are great were now offering from are comfortable lead to our beautiful dresses and it's firing pure joy collection she's gravitating toward novelty a new book online and and store with a sense of urgency to purchase not reliant on promotion
spk_2: as we look forward we will continue the drive a deliberate cadence ugliness to continue to build a moment and we're seeing most recently we were thrilled with the strong performance we've been to date may particularly over the mother's day holiday with the ability to celebrate holidays and special moments in person with family and friends or customers eager to shop and we are thrilled to be the lighting her once again
spk_0: with respect or operating model and the ongoing work to than the foundation or specially committed for continued focus on disciplined inventory management
spk_2: the throng birth margin recovery we thought she won benefited from our leaner and healthier inventory they've allowed us to sell more at full price and pull back on promotion accordingly the with a great indicator of a healthier business that we tend to lean into going forward
spk_0: in summary we're very pleased with the progress made during the first quarter and believe it is an important step forward we continue with the opportunity to refine our operating model and drive efficiencies across our organization and we will be working hardly product against these initiatives look forward to continuing to the our customers with incredible product and the shopping experience you trust us to deliver wherever and whenever she chooses to shock a job
spk_2: i will now term call over the marked with your first quarter financial results in more detail
spk_3: thank you claire and more have one as claire measured for first quarter of twenty twenty one month another quarter and good progress british show our strategy coming into twenty twenty one falling over the impact and twenty twenty was to drive gross margin mean and then tories and lower promos or product collections resonated better with customers anticipated contributing to resolve above our expectations for core store sales up fifty six percent or que one twenty twenty which was impacted by the temporary store closures called my team also each month and the first quarter of twenty twenty one was sequentially better than a prior month when compared against why nineteen direct sales were about twenty nine two levels and up thirty three percent first you want twenty twenty driven by cause a customer spots to do full price product clutch q one gross marginal sixty eight percent up almost thirteen hundred basis points or que one twenty twenty and up two hundred and twenty basis points compared to she want twenty nine two the improving as march was driven primarily by better for high salary and lower promotional discounts as she added expenses were seventy nine million dollars down nine million dollars first prior here and down twenty six million dollars versus twenty nineteen driven by worked on last year are offering model that has resulted in i find more investment and a lower selling and off can see costs adjusted and come from operations was eight point eight million dollars compared to adjusted last from operations of thirty five point six million dollars in the first quarter of fiscal twenty twenty for the first quarter as called twenty twenty one the company did not encourage any apparent charges compared to fifty two million dollars impairment charge in the first quarter of fiscal twenty twenty please refer to today's press release for reconciliation of adjusted income from operations turn into the balance sheet total quantity as defined in an priming term loan agreement measures and in cash plus check flow plush bbl available i was thirty one point three billion dollars at the end of the first quarter in line with our whole to manage inventory tightly to support full price dollar inventories at the end of the corner were down twenty one percent compared to last year's quarter and warrants related to the subordinated credit facility and the embedded derivative associated with the priming trombone or mark to market during the quarter driven by the increase in change your stock price since the end the fourth quarter twenty twenty resulting and a half charge the income statements approximately twenty one million dollars which cause an increase in the related liabilities or the same amount additionally since the end of the quarter in accordance with the terms of the priming while we issued approximately two hundred and seventy two thousand additional shares to the priming lenders as it may thirty first with the continue to increase in jail stock prices be and of first quarter we will recognize an additional thirty nine million dollar non cash charge for the final mark to market adjustment as of may thirty first the value of the warrant and embedded derivative liabilities are considered equity rather than liabilities as of may thirty first with no further mark to market adjustments beyond that day capital expenditures and a quarter were about five hundred thousand dollars versus one point eight million dollars last year still expect to spend approximately ten million dollars in capital for full fiscal year twenty twenty one we close to stores in the first quarter ending with two hundred and sixty five stores and still expect a close about twenty stores for the full year twenty twenty one as we look to the balance of the year as claire mentioned we're pleased with are strong start to the second quarter and with the momentum in the business we expect second quarter revenue to continue to rebound as we anniversary temporary store closures from last year and store traffic levels continue to recover and both lifestyle summers balls with respect to gross margin we like many of our peers in the industry have reported have and expect to continue to experience supply chain disruption today any impact has been negligible and we will continue to work with our supplier base and logistics providers to mitigate as much as possible going forward we remain focus on driving full price selling at lower promotional discounts which should support gross margin expansion through the end of this year thank you and i now have a back over to claire
spk_2: thank you mark and thank you all for your country in the morning we're pleased with momentum were driving in the business and a great response we're seeing from our customers i want to thank all of our teams and stakeholders for their ongoing support of jail we have an incredible brand and a great opportunity in front of us to continue to build on the progress we're making we look forward to seeing you again on our next year you can thank you
spk_0: this concludes today's conference call on behalf of churchill we thank you for pitchers painting human a disconnect
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