At J. Jill Inc., caution is the catchword for 2023, but growth is seen by raising awareness of the brand, opening stores judiciously, and sticking with its newfound focus on full-price selling.
That was the key message from J. Jill chief executive officer Claire Spofford during her presentation at the ICR Conference on Monday. Just before her presentation, the company reaffirmed its guidance for fourth-quarter revenues to be flat to down 3 percent compared to the fourth quarter of fiscal 2021, and for adjusted earnings before interest, taxes, depreciation and amortization to be in the range of $9 million and $11 million.
For fiscal 2022, the company continues to expect revenues to grow between 4 and 5 percent, and adjusted EBITDA to be in the range of $103 million and $105 million.
“We put profitability ahead of top line. In the past, maybe we had chased top line a little bit at the expense of the middle of the P&L,” Spofford said. “And so we remained very focused on maintaining margins and gross margin development. We did that through a disciplined approach to inventory management, which we have been very diligent about over the last couple of years, making sure that we are in a healthy position from an inventory standpoint. And that has also allowed us to focus more on full-price selling.
“We feel happy that we were able to sort of stick to our guidance and deliver against our expectations.”
Seasons ago, J. Jill came out of the gate with new products at 30 percent off, Spofford observed. “We’d set the floor and we’d be already at 30 percent off. So we never gave the products the chance to sell at full price. We don’t do that anymore. We flow product regularly,” instead of about 12 major floor sets a year supported by a catalog at the outset and then another catalog mid-delivery.
Regarding J. Jill customers, whom Spofford characterized as typically 45 to 65 years old with an average household income of $175,000, “As she looks at the volatility in the stock market and she looks at her portfolio and she looks at impending recession, she’s going to be a little bit more cautious and that’s why we’re taking the (cautious) approach as we go into 2023. We’re going to earn our way to any growth. We’re not going to get out over our skis.”
The $585 million company generates about 50 percent of its volume through its stores, and 50 percent through digital.
“Because we do have such a strong direct-to-consumer business, we know where our existing customers are, and we know a lot about them,” said Spofford. “So we can be pretty surgical about where store opportunities are, and can also append that data with look-alike customers and high-potential locations. We use all of that data to help decide where we’re going to put that next store.”
Unlike other retailers, J. Jill is “not terribly Q4-dependent. Q2 and Q3 are our biggest profitability quarters and Mother’s Day is actually bigger for us than the holiday season,” said Spofford.
“We feel like we do have a great runway of opportunity. We have relatively low awareness in our space. We are not over-stored. We will have 243 stores as of the end of this fiscal year. And so, we think that there’s a store unit growth potential with the right economics.”
J. Jill’s “Welcome Everybody” campaign has been raising awareness of the company’s inclusive size offering which runs from extra small to 4X. “This is a long-term growth initiative for us that we’ve only just begun,” said Spofford.