J. Jill, Inc.

Hello, everyone. Thank you for joining us and welcome to the J. Jill, Inc. Second Quarter 2026 Earnings Call. 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 Jay Jill's SEC filings. The forward-looking statements made on this recording are as of September 9, 2026, and Jay Jill does not undertake any obligation to update these forward-looking statements. Finally, J. Jill 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 September 9, 2026. 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 J-J-I-L-L dot com. I will now hand the conference over to Mary Ellen Coyne, CEO and President. Please go ahead.

Good morning and thank you for joining us. Our second quarter results indicate a meaningful step forward and reflect the progress we are making across each of our three strategic priorities. Evolving the product assortment, enhancing the customer journey, and advancing the way we work. We are thrilled to have delivered results that exceeded our expectations and represented a significant improvement in trend from the first quarter. This momentum has carried over into the start of the third quarter and gives us confidence to raise our guidance for the year while strategically deploying tariff refunds to invest in the business. Before we discuss our outlook, let me provide highlights from our second quarter results. Net sales for the second quarter increased compared to last year, supported by an improving trend in our full-price business across both stores and direct. In the direct channel, we continued to enhance the product detail page experience with improved fabric and fit information, as well as richer item-level storytelling. This channel also benefited from increased markdowns given the seasonal sale period. In stores, we saw positive traffic for the quarter where our teams are effectively engaging existing, returning, and new customers with the energy and expertise that differentiate the J. Jill in-store experience. In terms of profitability, we delivered adjusted EBITDA of $20.1 million excluding the benefit of tariff refunds and the actions we initiated in the quarter to strategically invest in the business. My confidence in the quarter's results goes deeper than the numbers to the source of the progress. From meaningful improvement in customer acquisition and more effective marketing to stronger product execution. The customer file is stabilizing and new to brand acquisition is accelerating. Exactly the combination we have been working towards. Huge thanks to our teams who are aligned and delivering with speed and precision. With that said, I want to put our progress in context. While we are encouraged by both the direction and momentum, we are still in the early stages of this evolution. Each quarter, we learn more about our customer, sharpen our assortment strategy, and continue to strengthen and build the capabilities that will drive sustainable long-term growth. Let me walk you through our three areas of strategic focus. I'll start with evolving the product assortment. Our Q2 assortment represented continued progress and reinforced important learnings that will directly inform the second half. We saw meaningful strengths in a number of categories, particularly outerwear and accessories. Accessories has been a standout as it scales, which we expect to continue into Q3. We are also very encouraged by the introduction of our Luxe Lounge Collection and the relaunch of our denim assortment, which are seeing great early results. In terms of opportunity, customer purchasing behavior and direct feedback point to an appetite for more color and more breadth. We heard this in Q1, and we are taking action that will begin to be seen in our fall and holiday assortments. We anticipate these kinds of learning cycles as we move forward and I am proud of how the team is incorporating feedback and reacting in real time. We are constantly evaluating the assortment to make sure we are serving both our most loyal existing customers and the newer customers we are attracting into the brand. We are also modernizing our sub-brand portfolio. We are consolidating the best-selling pieces of the Wherever sub-brand into the core J. Jill assortment in a way that preserves what customers love about it. This is a deliberate decision to simplify our lineup and reallocate investment into areas where we see the most growth potential. For example, Luxe Lounge, which include our travel capsules, and Denim, an important lifestyle component of the brand, are now building into meaningful categories. Pure Jill, our most iconic sub-brand, known for quality and craftsmanship, remains a priority. Looking ahead to the second half, we are entering it with a stronger and more strategically aligned product framework. Our design and merchandising teams are fully in sync The early reads on our fall assortments are encouraging and we expect gradual sequential improvement to continue. Turning to enhancing the customer journey. This was a standout area in Q2 thanks to the significant progress made by our teams. Our total customer file saw improvement from the start of the year and is showing signs of stabilization from which we have a foundation to grow. That improvement was driven by strong new-to-brand acquisition and continued success reactivating last customers. The profile of our new-to-brand customer is also improving, with a slightly younger customer coming into the file. These are early indicators that our approach to broadening the appeal of the brand is resonating with the evolving J. Jill customer without disrupting the deep relationship we have with our highly loyal base. We are also seeing these new-to-brand customers spend more with us than in recent history, driven by higher average order value and more trips, both of which are encouraging. Supporting this success is our marketing engine, which is performing well across channels, driving new customer acquisition and generating stronger returns on our investment. SMS continued its growth trajectory with our subscriber file scaling nicely and our catalog is delivering improved profitability with disciplined optimization driving better returns on a more focused circulation base. Our loyalty program is also showing encouraging early signs with members retaining at a meaningfully higher rate than non-members. Behind that, our marketing team is bringing together JJCC and our loyalty program Jay Jill Collective, into a more unified view of the customer, organized around two clear areas of focus, acquisition and retention. Historically, the vast majority of our marketing investment has gone toward existing customers and capturing demand we know is there. We are actively rebalancing this mix toward prospective and reactive customers, while building broader brand awareness to drive demand generation. Looking ahead, we are investing even more into these efforts, deploying tariff refunds into second half marketing, including at the top and middle of the funnel, an investment this year that we believe will have a continued impact as we move into next year and beyond. On our third pillar, advancing how we work, we continue to strengthen and build the capabilities that will support our business at a higher level over time. We are increasingly leveraging AI-enabled tools to drive efficiencies across the organization, and our teams are utilizing these new tools to increase capacity, improve decision-making, and unlock new ways of working. Our new AI-enabled merchandise planning and allocation system is on track to begin launching later this year and will be an important new tool to support full-price selling which will drive top and bottom line growth. In addition to this work, we are also progressing on several investments to enhance our digital platform and personalization technology, both of which will modernize our digital business. Additionally, we are utilizing a portion of the tariff refunds to pull forward the kickoff of exciting technology initiatives into fiscal 2026 that should deliver benefits earlier in 2027. It is important to note that we have made the intentional decision to invest most of the refunds into these strategic initiatives, which we believe improves the customer experience, strengthens the business, and positions us for a more productive 2027. We are also moving forward with a strong team fully in place The energy across the organization is palpable. This was highlighted in our recent Denim launch. The product teams tested new shapes and moved quickly once we saw which resonated most strongly. Our marketing team developed an integrated influencer campaign that drove exceptional early engagement, with nearly a million impressions in the campaign's first three days alone. Our stores brought the launch to life with dedicated fit events and activations, and our website team built dedicated content to support it. This is a great proof point of what we can achieve when our product, marketing, stores, and direct teams are fully and seamlessly aligned. With that, I'll turn it over to Mark to speak to the details of our financials and our updated outlook.

Thank you, Mary Ellen, and good morning, everyone. We are very pleased with our second quarter performance, as Mary Ellen reviewed. We delivered sales growth above our guidance and underlying adjusted EBITDA of $20.1 million. This underlying performance excludes the $13.3 million in net tariff refunds received in the quarter, as well as the deliberate decision to begin to invest in strategic initiatives and, to a lesser extent, cover emerging cost pressures from fuel surcharges on shipping. In the second quarter, about $600,000 of the refund was absorbed by these investments and costs. The receipt of the tariff refunds presents an opportunity, and we have made a deliberate decision to invest most into strategic priorities we believe strengthens the business, supports our momentum, and sets us up well for 2027. Both our third quarter and full year outlooks, which I'll discuss in a moment, reflect this decision. But first, I'll review second quarter results. Total company sales for second quarter were $154.8 million, up 0.5% compared to Q2 2025. Total company comparable sales for the quarter were up 0.5%. Non-comp sales from new stores were offset by timing associated with reserves. Looking ahead, we expect non-comp spread will normalize between one and two percentage points. Store sales for Q2 were down 0.7% compared to Q2 2025, as strength in full price sales was more than offset by a decline in markdown selling in stores during the quarter. Direct sales, which represented about 47% of total sales in the quarter, were up 1.9% compared to second quarter of fiscal 2025, driven by higher markdown sales during the quarter. As Mary Ellen mentioned, we did see a meaningful improvement in full price sales performance versus prior year in second quarter compared to first quarter full price year-over-year results. Q2 total company gross profit, including the impact of net refunds, was about $119 million, up $13.6 million compared to Q2 2025. Q2 gross margin was 76.8%, up about 840 basis points versus Q2 2025. Excluding net tariff refunds, gross profit was $105.7 million and gross margin was 68.3%. about flat versus Q2 last year as a higher full price gross margin rate offset a greater mix of markdown sales compared to last year. SG&A expenses for the quarter were about $94.6 million compared to approximately $88.6 million last year. The increase was driven by store expenses due to eight net new stores compared to second quarter last year, increased occupancy costs on lease renewals Marking expense, including strategic investments mentioned. Shipping expenses due in part to fuel surcharges and higher management incentive accruals. Adjusted EBITDA for second quarter was $32.8 million compared to $25.6 million in Q2 2025. Excluding the tariff refunds and the approximately $600,000 related to the strategic investments and costs I mentioned, All forward guidance we are providing today include net tariff refunds as well as our strategic investments and cost coverage assumptions. Total interest expense was $1.9 million in the second quarter compared to $2.7 million last year. Adjusted net income per diluted share was Thank you all for joining us. resulting in approximately one cent of benefit to reported second quarter adjusted diluted EPS. As of the end of the second quarter, we had approximately $11.8 million remaining on the $25 million share repurchase authorization. We also paid our quarterly dividend of nine cents per share on July 8th, and as announced on September 2nd, our board approved payment of the Q3 dividend on October 7th to shareholders of record as of September 23rd. Please refer to today's press release for reconciliations of non-GAAP financial measures to their most comparable GAAP financial measures. Turning now to the balance sheet, for the quarter, cash from operations was about $46 million, including approximately $19 million related to gross tariff refunds. Ending cash including these refunds was about $77 million with funded debt on the balance sheet of approximately $72 million. Excluding the impact of refunds, cash from operations was approximately $27 million and free cash flow was approximately $25 million in the quarter. Looking at inventory, we ended second quarter with inventories in good shape, down about 5% compared to end of second quarter last year. We are now anniversarying incremental tariff expenses that previously impacted year-over-year comparisons, so reported inventory growth is now on a life-for-life basis. Capital expenditures for the quarter were about $2 million compared to $3 million last year. Spend was focused primarily on store projects, including anticipated openings and the merch planning and allocation project expected to launch later this year. With respect to store count, we did not open or close any stores during the second quarter, resulting in end of quarter store count of 255 stores compared to 247 stores at end of Q2 last year. Now, turning to our outlook. As mentioned, we made the deliberate decision to strategically invest the majority of the net tariff refunds. These investments are primarily focused on marketing, to build the brand and accelerate file growth, which will in part support second half 2026 sales growth while also benefiting 2027 and beyond. The outlook we are providing today takes into consideration the refunds as well as these investments, which we expect will be fairly evenly split between the third and fourth quarters. This will result in a bigger impact to Q4 given the relative size of EBITDA historically in this quarter. In addition, Given the evolving tariff regulations, we now are estimating tariff rates will land at 10% to 12.5% for goods landed in second half. For our third quarter outlook, we expect adjusted EBITDA to be in the range of $20 to $22 million. This range assumes sales will be up 3% to 5% for the quarter, and comps will be up 1% to 3%. Gross margins are assumed to be about flat compared to last year. Second half tariff costs at current rates are expected to be down approximately $1 million compared to our prior expectations and down versus last year beginning in fourth quarter. With respect to full year, we are updating our full year outlook as follows. Adjusted EBITDA now expected to be in the range of $75 to $80 million which reflects tariff refunds received partially offset by the investments and costs I mentioned. Sales are now expected to be flat to up 2% versus last year. Comp sales are expected to be between down one to up 1% and gross margin reflecting in part the benefit of tariff refunds is expected to be up 100 to 150 basis points versus prior year. With respect to full year capital expenditures, we continue to expect spend of between $20 and $25 million. Regarding store count, we now expect to open between one and three net new stores this year, with two planned to open in third quarter. The slight reduction versus prior guide is due to landlord delivery delays on two stores that will most likely push those openings into early 2027. And finally, with respect to free cash flow, we now expect free cash flow of approximately $40 million. As previously mentioned, we announced our quarterly dividend of $0.09 per share payable on October 7th to shareholders of record on September 23rd. We have repurchased approximately 168,000 shares year to date for about $2.3 million, including the repurchase of 100,000 shares in Q2. Since launching our repurchase program in Q4 2024, we have repurchased about 826,000 shares for $13.2 million, leaving approximately $11.8 million of the original $25 million authorization available. Thank you. I will now turn it back over to Mary Ellen for some closing remarks.