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J. Jill Sees 71.5% Drop in Earnings for Qtr.

NEW YORK — J. Jill Group had a tough first quarter, attributed to the usual war-weather-economy-Easter reasons, as earnings plummeted 71.5 percent.<br><br>The Quincy, Mass-based company, which operates 93 stores, said for the three months ended...

NEW YORK — J. Jill Group had a tough first quarter, attributed to the usual war-weather-economy-Easter reasons, as earnings plummeted 71.5 percent.

The Quincy, Mass-based company, which operates 93 stores, said for the three months ended March 29, income fell to $768,000, or 4 cents a diluted share, compared with income of $2.7 million, or 14 cents, recorded in the year-ago quarter. Sales for the quarter advanced 12.3 percent to $82.4 million over sales of $73.4 million. By division, direct sales were on par with last year at $51.1 million, and retail sales increased 40.7 percent to $31.5 million, due to its store rollout.

Gross margins decreased 370 basis points to 31 percent of sales due to higher markdown charges and the deleveraging of fixed costs. Selling, general and administrative expenses increased 100 basis points to 29.2 percent of sales from 28.8 percent because of lower sales productivity and a shift of the mix of the business to retail, which has higher selling costs.

“The first quarter was a challenging quarter for J. Jill,” Gordon Cooke, president and chief executive, said in an afternoon conference call. “Like most other retailers, our business was impacted by a number of external factors such as the war in Iraq, the economy, weather and this year’s timing of the Easter holiday.”

Cooke also noted the combination of these events made it difficult to discern any business trends and that the firm would not provide guidance for the current quarter. For example, he said its spring direct business generated strong results in January and March and lackluster results in February and April. At the same time, its retail units posted mixed results in January and February and have seen improved performance in March and April.

Although Cooke described the current business climate as difficult, he said the company continues to make progress in its long-term goal of becoming a national lifestyle brand appealing to active, affluent women between 35 and 55 years old.

“With 38 percent of our sales coming from retail, 21 percent from e-commerce and 41 percent from our catalog in the first quarter, we have made tremendous progress toward this goal in just a little over three years,” the ceo said. Last year, the company said catalog sales comprised 51 percent of sales, followed by retail, 30 percent, and e-commerce, 19 percent.

The ceo identified three areas of investment to transform the catalog company into a full-fledged multichannel retailer, including product development; sourcing and design processes, and the creation of an enterprise-wide customer database.