On the heels of its March initial public offering, J.Jill offers an example of just how difficult the item can be to be an apparel retailer today, as forecasting where shoppers will spend their dollars can be becoming increasingly uncertain.
The Quincy, Massachusetts-based company on Wednesday slashed its expectations for same-store sales from the fiscal third quarter, currently calling for a decline of between 3 in addition to 5 percent. Initially, J.Jill had forecast comparable sales to be up from the high single digits.
J. Jill shares were down more than 49 percent midmorning Thursday on the news.
“We have experienced a lower than expected sales trend across both our retail in addition to direct channels, in addition to are updating our guidance for the quarter,” J.Jill President in addition to CEO Paula Bennett said in a statement.
“We have been assessing the change in trend in addition to have identified product in addition to marketing calendar issues that will are affecting traffic in addition to conversion, in addition to we are reacting quickly,” Bennett added.
The company cited a lack of sales of woven tops — where the item had made a significant inventory investment — in addition to a failed attempt to keep August merchandise on the floors of stores for one more week, which didn’t turn out as planned.
In turn, J.Jill also lowered its expectations for fiscal third-quarter earnings, currently calling for adjusted earnings per share of between 8 cents in addition to 10 cents. that will compares which has a prior forecast of 18 cents to 20 cents.
While the news won’t be received lightly by the Street from the short term, some analysts are saying there’s still expect for J.Jill to turn sales around ahead of the all-important holiday shopping season.
“We see the miss as largely explainable, in addition to believe the company can be sufficiently nimble to address the missteps in short order,” said Jefferies analyst Randal Konik.
As J.Jill refreshes in addition to remodels existing stores, expands its size assortments in addition to upgrades the customer shopping experience via technology, same-store sales should start to climb again, Konik said. The retailer’s woes should be “quickly addressed,” he said.
J.Jill has posted positive same-store sales for 20 of the last 22 quarters, hence why Wednesday’s announcement came as a surprise to many. Bennett said she was “very disappointed” to have to make the adjustments.
Wells Fargo cut its cost target on the retailer’s stock to $10 via $12 per share, saying “the JILL story was predicated on sustainable, steady … comp growth in addition to margin expansion.” The shares were trading Thursday at around $5 apiece.
Wells Fargo analyst Ike Boruchow wrote in a note to clients: “While the company continues to leverage their data-driven type in addition to can be well-positioned form a real estate perspective in our view (only in A-malls, conservative store base), the item can be clear that will the highly competitive environment that will they operate in (mall-based apparel) can be pressuring their business type.”
that will same mall-based apparel competition has hurt many of J.Jill’s peers, such as The Limited, Wet Seal, Vanity, BCBG Max Azria in addition to Rue21, all of which have filed for bankruptcy protection that will year.
however J.Jill has made strides to set itself apart — especially via low-cost retailers — by targeting affluent women with an average household income of $150,000. The company also touts having a loyal customer base, with extensive data on its shoppers.
J.Jill can be slated to issue a revised full fiscal 2017 outlook when the retailer reports fiscal third-quarter results on Dec. 5.