J. Jill to close stores as Q1 sales, profits plunge

Dive Brief:

The apparel retailer reported a first quarter total net sales decline of $85.5 million to $91 million, from $176.5 million in the year-ago quarter. Direct-to-consumer net sales reached 61.4% of total net sales, compared to 41.9% a year ago, according to a company press release. Because stores were closed much of the period, the company didn't provide comps.
Year over year, the apparel retailer swung to a loss in a few measures, recording an $89.7 million loss from operations, (or, excluding non-recurring and impairment expense, a $35.6 million loss), compared to $10.8 million in operating income a year ago; net loss was $70.3 million, from net income of $4.4 million last year.
In June, the retailer issued a going concern warning with its 10-K, noting that it might not survive the next 12 months in business due to "uncertainty created by recent events."

Dive Insight:

With sales declining and financial losses mounting well before the pandemic made selling apparel that much more difficult — a situation that forced Linda Heasley out from the CEO post and the board last year — J. Jill has been especially vulnerable to the fallout in the first quarter.

It's been a rough period. The retailer suffered a downgrade from S&P, reportedly hired restructuring advisers and bought some time to pay down debt; those two forbearance agreements have been extended again to Thursday, the company said in its filing this week.

The retailer has been reopening stores, but some will close permanently. Plans are to end the year with 275 locations. The company said it closed one store in the first quarter, ending the period with 286, but expects to close another 11, most in the second quarter.

The precarious situation is apparently making some executives skittish, and that is costing the company. In another filing this week, J.Jill said it has granted CFO Mark Webb a cash retention bonus "in an amount equal to the sum of his annual base salary and annual target bonus" as long as he stays with the company through July 30, 2021, barring a "qualifying termination."

In addition to stock awards, Webb's 2019 salary was $456,923 and his 2019 bonus was $418,462, according to proxy materials prepared for the company's September annual meeting of shareholders that are filed with the SEC. Webb also received a 401(k)-matching contribution of $4,327 and another $161,032 intended to defray relocation costs and tax payments.