J. Jill Inc.’s fourth-quarter results bested Wall Street’s estimates, but investors were disappointed with the first quarter’s business trends.
For the quarter ended Feb. 3, net income was $29.3 million, or 67 cents a diluted share, versus $2 million, or 5 cents, a year ago. Adjusted diluted earnings per share, excluding one-time charges and the benefit from tax reform, was 13 cents. Net sales rose 13 percent to $188.7 million from $166.9 million. Total company comparable sales rose 8.9 percent.
Wall Street was expecting EPS of 9 cents on sales of $178.5 million.
The company also disclosed before its earnings report that chief executive officer Paula Bennett would retire on April 16 and be succeeded by Linda Heasley. Bennett led the team that took the company public last year.
Bennett told Wall Street analysts in a morning conference call, “Our retail channel continued to be our stronger performer, as our store saw increased traffic and delivered higher conversion and average transaction value. And we look to continue to leverage this important channel.”
The ceo said that in 2017, “We continue to have strong customer loyalty, with our customer file growing nearly 7 percent for the year, ending fiscal 2017 with 1.84 million active customers.”
She noted the completion of the rollout of J. Jill’s new e-commerce platform, although “results continue to underperform.” She cited site and product issues that have affected traffic and conversion in the channel, but noted that recent learnings are being incorporated into the retailer’s 2018 plans to reverse the trend.
But it was the first quarter that had investors concerned.
The women’s specialty chain projected first quarter comparable sales decline in the mid-single digit range. Diluted EPS were guided to the range of 18 cents to 20 cents, including a 4-cent benefit from the recent change in the U.S. corporate tax rate. That’s compared with diluted EPS of 22 cents and adjusted diluted EPS of 24 cents a year ago.
David Biese, executive vice president, chief financial and operating officer, said on the call that the first quarter’s business so far has been “well under expectation. And we will continue to promote to at least the first half of the year to get inventory in line with demand. We have been able to reduce our second half purchases with a goal of having a healthier balance of supply and demand.”
Investors sent shares down 35.2 percent to $4.83 in late morning trading at 11:32 a.m.
Some analysts such as Randal J. Konik at Jefferies still believe in the stock. He has a “Buy” rating on shares of J. Jill. According to Konik, “What’s encouraging to us is solid store performance and an increasing customer file which suggests the [J. Jill] brand is fine and problems are correctable.”