J. Jill closing stores – Following a successful comeback, J-Jill maintains its brick-and-mortar business by managing its inventory carefully.
The clothing retailer, which struggled to stay afloat during the worst of the pandemic, is currently focusing on creating steady, profitable growth. According to CFO Mark Webb, the company exceeded its estimates for the quarter in large part. It’s because of store sales, particularly those that occurred early in the year. The most productive month during that time was January.
J. Jill closed the year with fewer locations and may close more as leases expire. However, the goal of the business is to expand its footprint gradually. As of July 6, 2023, there were 246 J. Jill stores in the nation as a whole. With 21 stores or nearly 9% of all J. Jill stores in the US, California is the state with the most J.Jill locations. Let us view the struggles that J. Jill faced in detail in this article.
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Who owns J. Jill?
The American womenswear company J. Jill was established in Massachusetts in 1955. Jill is based in Quincy, Massachusetts.
After being acquired by a competing store, The Talbots, Inc., in 2006, J.Jill ceased to be a publicly traded corporation. Golden Gate Capital repurchased the business in 2009 for a discounted $63 million.
J.Jill re-listed as a publicly traded corporation on the New York Stock Exchange (NYSE) on March 9, 2017. Analysts cited its shares’ 53.5% decline in June 2019—the most significant percentage drop since its IPO in 2017. It’s attributed to the design and colour problems with its inventory as well as a transition from a catalogue model to a digital sales platform.
J.Jill’s Retail Revamp in 2021:
J. Jill had been vulnerable to the consequences in the first quarter of 2020. It was due to dropping sales and rising financial losses before the pandemic. It made selling clothing even more challenging, like other businesses during that time. This situation led Linda Heasley out of her position as CEO and the board in 2019.
It’s been a challenging time. S&P downgraded the store, which apparently sought restructuring advisors and bought time to pay down debt. The company reported that it shuttered one location in the first quarter of 2020, leaving it with 286 stores overall. It also anticipated closing an additional 11, most likely in the second quarter.
The store was hopeful that strict inventory control and the newness of its products would help it increase full-price sales. In such a way, it worked to close 2020 and avoid bankruptcy. Inventory dropped to $59.3 million at the end of the first quarter from $75.5 million at the same time last year. It was a 21 per cent fall. Chief Financial Officer Mark Webb stated during an earnings call that the decrease is
“in accordance with our goal to manage inventory carefully to support full-price selling.”
J. Jill closed about 20 locations in 2021. With a reduced area and a focus on full-price sales, it aimed to bounce back. Sales at the retailer increased 41.9 per cent in the first quarter of 2021 to $129.1 million. But they still lagged 26.9 per cent behind the $176.5 million they brought in during the same time in 2020.
The retailer of women’s clothing did not give any financial projections for the second quarter of 2021. J. Jill expected second-quarter revenues to continue to increase as a result of shop closures from the previous year. Also, it was hoped for an increase in store traffic in malls and lifestyle centres, according to Webb.
According to J.Jill CEO Claire Spofford
“While traffic continues to improve, our customer has shown us she’s really excited to shop with us in stores and online. This spring, we noticed a positive response to our product lineups. Customers—both old and new—are really interacting with us. They are responding favourably to our excellent wear-now selection. She is attracted to novelty and newness both online and in-store. She is inspired by the Pure Jill collection, with a sense of urgency to purchase that is unrelated to marketing.”
Jill saw an incredible rebound in fiscal 2021. According to Claire Spofford, president and CEO of J.Jill Inc.,
“The strengthening of our operating model fueled it. We aimed to deliver gross margin growth. It is achieved by disciplined inventory management and full-price selling.”
“We successfully navigated a difficult macro environment, especially in the second half of the year. We generated considerable adjusted EBITDA expansion. I appreciate everything that my peers at J. Jill have done to advance our strategic goals.” Besides, Spofford discussed forecasts for the upcoming fiscal year.
“As we start the fiscal year 2022, we are happy with our performance to date. We enter the year building on the standards we have set, particularly with regard to inventory and spending management. We’ll continue to focus on generating profitable growth. Also, we focus on introducing new clients to our attractive brand and products,” he continued.
J.Jill plans to expand its customer base:
In order to welcome customers back into their stores in 2022, J. Jill developed a new inclusive campaign. It happened after nearly going bankrupt during the early stages of the pandemic.
The “Welcome Everybody” campaign provided apparel in a variety of sizes and designs to fit various body shapes. A variety of models and influencers were included. The retailer combined its “missy” and women’s sizes at the same time to offer a single-size-integrated purchasing experience.
The shop kept selling items for the short and tall. With price parity across all sizes, it sought to democratize the buying experience.
In the final quarter of fiscal 2021, the company shuttered seven locations. It left it with 249 locations nationwide in 2022.
However, since Spofford took charge, the company’s gross profit has increased by 61% to $394 million. Also, net sales have increased by 37% to $585 million. She claimed that soon after joining the company, she became aware that the products needed to be given a chance to sell at a total price.
When you have those discounted goods, Spofford said,
“you’re competing with yourself for your full-price business.” Instead of telling the story of “feel this fantastic product, feel that material, look at the specifics,” you always have to talk about markdowns of 30%.
The company’s net revenues increased by 21.7% in the three months that ended in April 2022. In comparison to a net loss of $18.3 million in the first quarter of fiscal 2021, net income was $14.4 million in 2022.
Nearly half of J. Jill’s sales occurred online in 2022. But Spofford mentioned the possibility of expanding brick-and-mortar stores during the first quarter results call in June, following a string of store closings the previous year. The business also revised a few leases. It concentrated on enhancing the profitability of its store fleet.
“It gives our customer the flexibility to purchase whenever and wherever she wants,” according to Spofford.
Before launching the “Welcome Everybody” campaign, J. Jill carried out a customer insight plan over the previous year. It included primary research with many existing and potential customers.
“I believe the challenge is to make sure that we get everything right,” Spofford added. “The very last thing we want is for her to be inspired and not have the experiences we want her to have.”
Overall, in 2022, J. Jill has observed some reluctance on the part of consumers to purchase products they do not need. However, CEO Claire Spofford stated to analysts in December 2022 that “careful merchandising had drawn customers rather than discounts.”
“We did start to notice some reluctance from customers. It’s due to inflation and macroeconomic worries that grew. But Spofford noted that “unique pieces” and dresses both performed well. “She kept going to find pieces she liked to remain willing to pay the full cost for unique and special items. It is causing us to float regularly throughout the quarter.”
She added, “We continued to find very little price resistance for things that were truly unique and exceptional.”
In August, J. Jill said they were broadening their customer reach by making clothes for more people and expanding their product range.
They’re also improving their sizing and merchandise strategy. It was done by getting rid of the Missy and Women’s sections, displaying all styles in all sizes, and keeping prices consistent across dimensions.
Aimed at customers between the ages of 35 and 55, J. Jill had tested out a more upscale line called Pure Jill Elements in seven stores. This line includes “special artisanal pieces created for the customer who is a fabric enthusiast. It is also for those who value special features that can command a higher price point,” according to Spofford.
“Early results from this trial have already offered valuable insights and chances. Thus, we might be able to extend our value proposition over time.”
J. Jill wants to expand the number of its stores
J. Jill reported that Q4 net sales in 2022 increased 1.7% year over year to $147.7 million. It’s because of its careful inventory management and also due to the client, who was financially protected by the challenging economic climate. Comps overall, including e-commerce, increased by 5.3%.
According to a business press statement, e-commerce sales, which make up roughly half of overall net sales, have decreased by 2.5%. Because of lower freight costs, which more than offset the margin pressure from promotions, the gross margin increased by 50 basis points to 64.4%. The net profit fell 71% to $1.04 million.
According to officials who spoke to investors, the women’s apparel store concluded the fourth quarter of 2022 with inventory down 9.6% to $50.6 million. It helped them avoid markdowns. J. Jill ended the year with 243 stores after closing five locations and opening one. Chief Financial
Operating Officer Mark Webb reported in March 2023 that store-based sales were up 6% year over year. It was despite there being 4% fewer locations.
He stated, “We desire to make fair deals and, in time, continue to build this critical channel. We feel there is scope to grow this channel. We are actively seeking to select new store openings. But we are firm in the metrics we need to do so.”
“The “Welcome Everybody” initiative from last year aimed to be more inclusive in pricing and merchandising. It has been successful. This year, the shop will put more effort into promoting it.
We will be experimenting with new marketing avenues and “working with influencers in the size inclusivity category,” CEO Claire Spofford said on the call.
“We were happy to see growth in this space, both in new-to-brand and reactivated customers,” she added. “Although it is still early, we are happy with the initiative’s early success and the chance to build on it in 2023 and beyond.”
J.Jill makes investments in tech:
J. Jill used software to discover the issue when its email deliverability dropped from 99.7% to 96.8% as a result of the email migration. By sending emails to its most loyal customers, the company “warmed its IP address”. Thus, it was able to get past Google’s and Yahoo’s spam filters.
At J. Jill, Cabral serves as senior manager of email operations and strategy. Michael Cabral works primarily with email for the women’s clothing brand J. Jill. “I keep an eye on all email-related metrics, but I keep a close watch on [inbound website traffic from email],” he claims.
The retailer finished the third and last email transfer in July 2022, at which point email deliverability decreased. Over the Fourth of July weekend, “we encountered an IP block,” claims Cabral.
When you consider a large number of individuals, Cabral adds, “That may not seem like a lot, but it’s actually pretty impactful for us.” According to Cabral, emails account for a “substantial portion” of J. Jill’s online purchases.
Since emails are now being read by their intended recipients, according to Cabral, J. Jill likes to highlight the “newness” of its products rather than discounts. He claims that is what interests customers. He is aware of this since he keeps track of what his email open rates indicate.
Customers who have purchased new or popular items from the retailer are additionally informed through email of any shipping delays. According to him, J. Jill emails customers who browse delayed items to let them know that they will be notified as soon as the item becomes available.
Cabral claims that website visitors have decreased since iOS was updated. “However, consumers are now spending more time on the website.”
According to Cabral, “Our engaged customers are still visiting [the website] and spending more money than they were before.”
According to Digital Commerce 360’s Top 1000 listing of the biggest North American e-retailers, J. Jill is ranked No. 245 overall.
J. Jill reports a decrease in net sales of 2.9%
According to J. Jill’s most recent financial declaration, the business performed well for the 13 weeks ended July 29, 2023. It was with net sales falling by 2.9 per cent to US$155.7 million from US$160.3 million for the same period in 2022.
Additionally, the company’s comparable sales, which include both in-store and online channels, fell by 1.3 per cent. The second quarter of fiscal 2023 saw a gross profit of US$111.4 million and a gross margin of 71.6 per cent. It is up from 70.1 per cent in the same quarter the previous year. The business’s credit lowers freight costs for the improvement.
A margin of 22.2 per cent was achieved for both years’ adjusted EBITDA, which for Q2 2023 was $34.5 million US compared to $35.6 million US in Q2 2022. Inventory levels were notable for declining 16.0 per cent to $45.7 million. It demonstrates the business’ dedication to effective resource management.
J.Jill, Inc.’s president and CEO, Claire Spofford, said:
“Despite a slower start to the quarter due to customer concerns with the changing macroclimate, we were happy with how the quarter progressed. The trends were increasing during the period. Additionally, we kept up with our conservative operating style. Thus, we’re happy with how our final inventory position looks.”
Conclusion
After the pandemic closed stores and negatively impacted their financial flow in 2020, J. Jill found itself on the verge of bankruptcy. When its lenders agreed to refinance, it was granted a reprieve. Due to the new initiatives, it has had a significant revenue increase over the previous year.
The business started featuring its workwear in its stores and advertisements. The company also introduced tools for clients to more easily search for and style a variety of work outfits on its website.
Long-time consumers are Jill’s most important asset, as the company has seen. Season after season and year after year, repeat customers are J. Jill is most devoted and spends the most.
