J. Jill, Inc.

one again. Before we begin, 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 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and JGL's SEC filings. The forward-looking statements made in this recording are as of December 10, 2025, and JGL does not undertake any obligation to update these forward-looking statements. Finally, JGL may refer to certain adjusted or non-GAAP financial measures during these remarks. A reconciliation schedule showing the GAAP versus non-GAAP financial measures is available in the press release issued December 10, If you do not have a copy of today's press release, you may obtain one by visiting the investor relations page of the website at jjill.com. That's jjill.com. I would now like to turn the conference over to Mary Ellen Coyne, CEO. You may begin.

Good morning, everyone, and thank you for joining us today. As seen in our press release this morning, we had a solid third quarter. We delivered better than expected earnings results, with top line at the high end of our expectations for the period, and drove healthy cash generation, a hallmark of our operating model. During the third quarter, we saw positive response to newness in the assortment, particularly in jackets and bottoms, including our fashion denim, faux suede and faux leather outerwear. We also took opportunities to test and rebalance our marketing mix, pulling back on catalog circulation while leaning into digital channels where we know customers are increasingly transacting. Within digital, we saw success, especially in prospecting where growth in new-to-brand customers delivered a healthy return. We also refreshed our imagery in store windows, digital, and catalog, leading to positive responses with customers noticing the more compelling displays and presentations. From a retail expansion perspective, we opened two new stores in Q3, one in Chicago, a re-entry market, and one in Houston, an existing and growing market for us. and are pleased with the early results they are driving. As we exited October and entered November, however, we saw a change in trend. The competitive market became very promotional very early, the customer demonstrated increasing price sensitivity, and our holiday product assortments did not resonate as well as we had planned. Importantly, we are not standing still Our entire team is collaborating, bringing fresh perspectives and new ideas as we focus on reinvigorating the customer file and driving growth. As we talked about previously, our goal for the second half of this year was to test and learn and inform our plans for 2026 when we will have the ability to more fully influence the product assortment. We remain focused on our three strategic priorities. First, evolving our product assortment. Our merchandising and design teams are now in place and working together to eliminate redundancy, incorporate new styles that serve more of our customers' lifestyle needs, and focus on areas where we see opportunities for scale. We recently introduced very small capsules in sleep, travel sets, and cashmere that we were able to chase into for the holiday season and are seeing strong full price results despite the promotional trends I mentioned earlier. We have also begun testing a more localized merchandising and planning strategy with promising early results from our New York store pilot where we tailored the assortment to local customer preferences. Second, enhancing the customer journey. We will continue to right-size our catalog circulation while reinvesting spend across channels and marketing funnels. Building on our small localized television advertising pilot last quarter, we are now testing a small national linear and streaming broadcast pilot as we continue to assess and learn how best to expand our reach. Our stores continue to serve as powerful marketing vehicles driving brand awareness while maintaining strong economics and profitability. We are excited for the new stores that will open before the end of the fiscal year, including our most recent opening in Pinehurst, North Carolina in November and our anticipated reopening in Asheville this month. We look forward to continuing to capitalize on the long-term opportunities for store growth ahead. Lastly, We are enhancing the customer experience with plans to launch a non-tender loyalty program toward the end of this fiscal year. Third, improving how we work. We recently took decisive cost actions to streamline our organization and improve operational efficiencies. These changes, while difficult, position us to operate more nimbly while investing in growth initiatives. we also created a new Chief Growth Officer role, welcoming experienced consumer executive Viv Redkey to our team to lead our e-commerce business, advance our AI initiatives, and drive our longer-term strategic roadmap. In summary, while we are focused on managing through the remainder of the year, the progress we are making on our initiatives today is building the foundation for our next chapter of growth, focused on expanding our customer file. We are modernizing our brand presentation, maintaining the loyalty of our core demographic as we welcome new customers, and leveraging technology to work smarter and faster. The foundation is solid, the opportunity is clear, and the execution is underway. Now I'll turn it over to Mark for detailed financial results.

Thank you, Mary Ellen, and good morning, everyone. Before I dive into our results and outlook, I want to reiterate Mary Ellen's confidence in the foundation of the business and the progress we are making toward the opportunities ahead. Over the past several years, we have developed and executed a disciplined operating model that generates dependable, strong cash flow that we have been investing into the business and distributing to shareholders through our ordinary dividend and share buyback programs. While we are focused on executing the fourth quarter and end of year 2025, we are also sharpening and evolving our product and marketing efforts to position the business for 2026 and beyond. Now I'll review results for the third quarter in detail. Total company comparable sales for third quarter decreased 0.9% compared to negative 0.8% last year. Total company sales for the quarter were about $151 million in line with the higher end of our expectations down 0.5% versus Q3 2024. Total company sales performance was driven by our direct channel as direct sales were up 2% compared to the prior year, while store sales were down 2.6% compared to prior year. The difference in channel performance was largely driven by traffic trends, as our direct channel saw positive traffic and some benefit from ship from store, while store traffic was soft in the quarter. In both channels, we saw lower conversion trends. However, our teams did a nice job managing promotions and markdowns to yield higher average unit retails. Q3 total company gross profit was about $107 million, down about $1 million compared to Q3 2024. Q3 gross margin was 70.9%, down 50 basis points versus Q3 2024, and included approximately $2.5 million of net tariff pressure in the quarter. This tariff pressure was less than originally expected due to timing and mix of sales and was partially offset by positive average unit retails compared to last year. SG&A expenses for the quarter were about $92 million compared to approximately $89 million last year. The increase was driven by non-recurring costs and shipping expenses associated with ship from store. Importantly, at the end of the quarter, we took decisive actions to right-size our organization and better prepare our teams to support future growth more efficiently. These actions will positively impact SG&A in the fourth quarter and into 2026, helping to offset expense pressure from new store growth and inflation. Adjusted EBITDA was $24.3 million in the quarter. compared to $26.8 million in Q3 2024. Interest expense was $2.7 million in Q3 compared to $2.8 million last year. Adjusted net income per diluted share was 76 cents compared to 89 cents last year, which reflected an average weighted diluted share count of 15.4 million shares this year versus 15.5 million shares last year. We repurchased 115,612 shares for approximately $2 million in third quarter, bringing year-to-date repurchases to about 371,000 shares for $6.5 million, resulting in approximately $0.02 benefit to reported third quarter adjusted diluted EPS. As of November 1st, we have approximately $18 million remaining on the $25 million share repurchase authorization. We also paid our quarterly dividend of 8 cents per share on October 1st, and as announced on December 3rd, our Board approved payment of the Q4 dividend on January 7th to shareholders of record as of December 24th. Please refer to today's press release for reconciliations of non-GAAP financial measures to their most comparable GAAP financial measures. Turning to cash flow, for the quarter, we generated about $19 million of cash from operations, resulting in ending cash of about $58 million. End of quarter inventory was up 8.4% compared to end of Q3 last year. Excluding approximately $6 million of net tariff costs, inventory was down 1% compared to end of quarter last year. Capital expenditures for the quarter were $3.3 million compared to $5.5 million last year, with investments focused primarily on store-related projects. With respect to store count, we ended the quarter with 249 stores compared to 247 stores at end of third quarter last year. We opened two new stores at the end of the third quarter. The first, a new store in the existing Houston, Texas market in Kingwood, and the second, a reentry in Orland, Illinois in the Chicago market. Turning now to our outlook for fourth quarter and full year. As Mary Ellen mentioned, there is tremendous opportunity to evolve our product and marketing to broaden the appeal of the assortments, drive awareness, and ultimately drive growth, and have already been making small tweaks with encouraging results. The full impact of this opportunity will be felt more meaningfully next year. With respect to Q4, the competitive promotional environment elevated, with many going early and deep with Black Friday deals. While our Black Friday Cyber Monday weekend showed some strength, overall November was challenging, and we believe the elevated promotional environment will continue through the quarter, which is assumed in our guidance. For the fourth quarter, we expect sales to be down approximately 5% to 7%, and total comparable sales to be down 6.5% to 8.5%. And regarding adjusted EBITDA, we expect Q4 adjusted EBITDA to be in the range of $3 and $5 million, reflecting significantly more gross margin pressure than experienced in Q3, given the elevated promotional environment and the expectation that the full impact of approximately $5 million of net tariffs will hit cost of goods sold in Q4. These pressures will be partially offset by slightly better year-over-year freight costs. In addition, while we expect SG&A dollars to be relatively flat compared to the fourth quarter last year, we expect it to deleverage given lower sales. Our year-to-date performance and expectations for the fourth quarter would imply that for the full year, we expect sales to be down about 3%, and comparable sales to be down about 4% compared to fiscal 2024, and for full year adjusted EBITDA to be between $80 and $82 million. Regarding store count, we expect to open seven new stores in the fourth quarter, including one opened in November in Pinehurst, North Carolina, a new market for us. We do not expect to close any additional stores this year, resulting in four net new stores for fiscal year 2025. And with respect to total capital expenditures, we expect to spend about $20 million in reported CapEx during fiscal 2025. In closing, we are focused on continuing to operate the business with discipline, which, as demonstrated in the third quarter, generates strong free cash flow and supports the investments we are making into the business and our commitment to distributing excess cash to shareholders as evidenced by our continuing dividend and share repurchase programs. We are energized by the work we have underway and confident that the strategies we are developing are setting the foundation to further support long-term profitable growth. Thank you. I'll now hand it back to the operator for questions.