J. Jill, Inc.

Thank you for standing by. My name is Jael and I will be your conference operator today. At this time, I would like to welcome everyone to the J. Jael, Inc. first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star 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 that 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 on this recording are as of June 10th, 2026, 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 June 10th, 2026. If you do not have a copy of today's press release, you may obtain one by visiting the Investor Relations Relations page of the website at jjill.com. I would now like to turn the conference over to Mary Ellen Coyne, CEO and President. You may begin.

Good morning and thank you for joining us. As I have said on previous calls, J. Jill is in the early stage of evolving both the brand and the business amidst the dynamics of a complicated external environment. We began 2026 with a sharp focus on expanding the customer file, making progress through disciplined execution in three key areas, evolving our product assortment, enhancing the customer journey, and advancing the way we work. This strategic framework is essential to build a solid foundation for sustainable long-term growth. Evolution takes time and requires patience as our product and marketing strategies are introduced to both new and existing customers. Insights gained in the first quarter, particularly in stores where customers can touch, feel, and experience our new assortment, supported by our exceptional sales associates, give us confidence in our ability to achieve success. We delivered first quarter results in line with our expectations for both sales and profitability. And while it was a challenging period for a number of reasons, we are actively applying learning that should continue to drive momentum throughout the rest of this fiscal year and beyond. We know through both customer research and feedback from our sales associates that customers want JGL to evolve as their approach to building a wardrobe has evolved. But we also know that we must take care with the pace and scale of that change. We are being thoughtful about infusing newness while retaining the essential elements our most loyal customers value. From a product perspective, our assortment in Q1 reflected the start of a transition. Still dominated by legacy product, but with some new styles and silhouettes representing where we are headed. Notable successes in the quarter were jackets and accessories. Accessories are only a small part of the business today, but they showed strong growth and we see more opportunity. As we know, accessories are often an entry point into a brand for new customers or an impulse purchase that reactivates last customers. In terms of key learning, tops assortment skewed too far into shorter lengths and did not offer enough breadth in print. Another highlight in the quarter was our new-to-brand customer acquisition, which has slight year-over-year growth, driven primarily through the retail channel. Our store teams continue to perform at a high level, engaging existing, returning, and new customers, and doing a great job speaking to the brand's evolution. We saw a meaningful improvement in the profile of these new customers who are younger than our existing customer's average age. While the new-to-brand segment of our customer file remains relatively small, we believe its growth is key to our long-term success. This progress is encouraging. We are also leveraging learning to make enhancements to our e-commerce site, such as fabric guides, look books, and stronger product storytelling, all of which help to educate online customers on our product evolution the way our sales associates are already doing in-store. While the e-commerce channel continues to be more price sensitive, we expect these new tools and enhancements to more fully animate our product assortment and move someone from discovery to purchase. Turning to our three key areas of focus. First, evolving our product assortment. We are excited by customers' initial reactions to our summer assortment so far in the second quarter. These assortments reflect better alignment between our merchandising and design teams, represent a real step forward in terms of product evolution, and are a good indication of where the brand is headed. These positive early reads are encouraging and position us for gradual sequential improvement in the second quarter and further throughout the remainder of the year, as indicated in our guidance. Second, enhancing the customer journey. As part of our plan to reinvigorate the brand and expand the customer file, we have already begun to enhance how people engage with JGIL across channels. During the quarter, we saw growth in the SMS file and in March, we launched a new non-tender loyalty program called J. Jill Collective to a small subset of our customer base. We have plans to roll this out and we'll share more in the coming months. Leading this program and all customer and marketing strategies is our new Chief Marketing Officer, Kimberly Wallengren. who joined us at the end of April. Previously with Coach and American Eagle, she brings a proven track record of leveraging marketing to drive brand evolution, boost relevance, and broaden the customer base. Kimberly's expertise is perfectly matched to our objectives, and we are delighted to welcome her to JJL. Our third area of focus is advancing the way we work. In addition to developing the right strategy, we have also been building the right capabilities. Our executive leadership team has the right balance of institutional knowledge, new insight, and transformation experience to deliver on this strategy. Our strategies and capabilities will also be reinforced with new tools, starting with a merchandise planning and allocation system later this year. The new system will move us from a manual and time-intensive approach to one with more predictive and data-driven forecasting that will allow us to better assess demand planning and allocate more effectively, which we expect will support higher full-price sell-through and greater markdown yield, beginning in earnest in 2027. In summary, we are still in the early days of our transformation, but I'm encouraged by our progress and the discipline with which our team is executing against our strategic priorities. With that, I'll turn it over to Mark to speak to the details of the financials and our outlook.

Thank you, Mary Ellen, and good morning, everyone. I'll begin with a review of first quarter performance before discussing our outlook. Regarding first quarter, Total company sales for the quarter were about $144 million, down 6% compared to Q1 2025, inclusive of total company comparable sales decline of 8.7%, which was partially offset by sales from new stores opened last year. Retail sales for Q1 were down about 4% compared to Q1 2025. driven by soft conversion partially offset by higher average unit retails and supported by net six new stores compared to the first quarter of 2025. Direct sales were down approximately 8% compared to Q1 2025 and represented about 46% of total sales. Sales declines were driven by conversion and a mix to markdowns as consumers continue to demonstrate price sensitivity especially in the direct channel. Q1 total company gross profit was about $98.7 million, down about $12 million compared to Q1 2025. Gross margin rate for Q1 was 68.3%, down 350 basis points versus Q1 2025, driven by approximately $4.7 million in net tariff costs. and a higher mix of markdown sales, primarily in the direct channel. SG&A expenses for the quarter were about $90 million compared to approximately $91 million in Q1 2025. Lower marketing costs driven by a timing shift of the April catalog into May, lower G&A overhead, and lower technology project costs were all partially offset by new store costs occupancy inflation, and merit increases. Adjusted EBITDA for the quarter was $16.7 million compared to $27.3 million in Q1 2025. Interest expense was $1.9 million in Q1 compared to $2.8 million in Q1 2025. Adjusted net income per diluted share was 45 cents compared to 88 cents last year, which reflected a diluted share count of 15.0 million shares this year versus 15.4 million shares last year. During the quarter, we repurchased 68,500 shares for approximately $790,000. And as of today, we have approximately $13 million remaining on the $25 million share repurchase authorization. Turning to cash flow, for the quarter, we generated about $1.7 million of cash from operations, resulting in ending cash of about $36.3 million. Free cash flow was an outflow of $1.1 million in the quarter. Please refer to today's press release for reconciliations of non-GAAP financial measures to their most comparable GAAP financial measures. adjusted EBITDA, adjusted net income, and adjusted net income per diluted share to net income, and free cash flow to cash from operations. Looking at inventory, total reported inventories excluding tariffs were down about 3.5% at the end of the first quarter compared to end of first quarter last year. As reported inventory, inclusive of the cost of tariffs, was up 5.6%. Capital expenditures for the quarter were $2.8 million compared to $2.7 million last year. Investments were focused primarily on stores as well as the new merchandise planning and allocation project. With respect to store count, we closed two stores during the first quarter and opened one new resulting in end of quarter store count of 255 stores compared to 249 stores at the end of Q1 last year. Now for more on our outlook. For full year, we are reaffirming our prior guidance for sales, comparable sales, gross margin, adjusted EBITDA, and free cash flow. We still expect full year sales to be flat to down 2%, full year comp sales to be down 1% to down 3%, year over year gross margin to decline approximately 50 basis points and adjusted EBITDA of 70 to $75 million. In addition, full year free cash flow is still expected to be about $20 million. We are continuing to invest in new stores that are adjusting our targeted net opening store count this year and related capital spend to reflect the current operating environment. As such, we now expect to spend between $20 and $25 million of CapEx during the fiscal year compared to prior guidance of approximately $25 million. And we now expect to open between one and five net new stores this year versus prior guidance of about five net new stores. These expectations reflect about six to eight new stores offset by closures. Our full year guidance reflects our expectation that strategies will show gradual improvement into Q2 before gaining more traction into Q3 and further momentum into Q4. For second quarter, we expect sales to be down 1 to down 3%, comp sales to be down 2 to down 4%, and adjusted EBITDA to be in the range of $18 to $20 million. This guidance includes the expectation for second quarter gross margin to decline approximately 100 basis points compared to last year, primarily driven by approximately $4 million of net tariff costs. With respect to tariff refunds, though we received early in the second quarter a small portion of our IEEPA tariff refund claim, we are not assuming any refund benefit in our guidance at this time, given ongoing uncertainties related to the timing and ultimate amount of any remaining reimbursement. Embedded in our guidance is an assumed average 20% reciprocal tariff rate on applicable inventory received prior to February 28th, 2026, and assumed average 10% tariff rate on applicable inventory received after February 28, 2026 through the second quarter of fiscal 2026, and an assumed average 15% tariff rate thereafter. These assumptions equate to approximately $14.5 million of net tariff costs in our expected fiscal 2026 gross profit, down slightly versus our prior expectation with the benefit assumed to be offset by higher fuel and other input costs within our outlook. Lastly, we remain committed to executing on our total shareholder return strategies. As announced on June 3rd, the Board declared a quarterly dividend of nine cents per share payable July 8th to shareholders of record as of June 24th. And we will continue to opportunistically repurchase shares though we'll do so at an appropriate pace. Now, I'll hand it back to Mary Ellen for a few remarks before we go to Q&A.