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JI

J.Jill, Inc. (JILL)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY25 net sales were $154.0M (down 0.8% YoY), gross margin compressed 210 bps to 68.4% on higher markdown and promotional mix; adjusted EBITDA was $25.6M and adjusted diluted EPS was $0.81 .
  • Management introduced Q3 guidance: adjusted EBITDA $18–$22M, net sales approximately flat to down low-single digits, and comps down low–mid-single digits, explicitly incorporating ~$5M quarterly tariff headwind; tariff rates have landed ~20% on average with India at 50% (vs prior 10% and 30% on China) .
  • Versus S&P Global consensus, Q2 revenue was essentially in line while EPS and EBITDA were below: Revenue $154.0M vs $154.23M*, Primary EPS $0.81 vs $0.91*, EBITDA $25.6M vs $28.9M*; Q1 and Q4 prior quarters frame a sequential stabilization after a softer Q1 .
  • Strategic catalysts: ship‑from‑store capability launched ahead of plan, refreshed store/online presentation, initial TV test, and loyalty program effort; long‑term goal remains 50 new stores by end of 2029 .

What Went Well and What Went Wrong

What Went Well

  • Ship‑from‑store launched well ahead of plan post‑OMS, improving omnichannel fulfillment and margin capture (“launched the new ship‑from‑store capabilities well ahead of plan”) .
  • Sequential monthly sales improvement in Q2 with strong customer response to July summer sale, ending with “clean inventories” .
  • Cost structure discipline: interest expense fell to $2.7M (vs $3.7M LY), and operating cash flow rose to $19.4M; cash ended the quarter at $45.5M .

Management quotes:

  • Mary Ellen Coyne: “We launched the new ship‑from‑store capabilities well ahead of plan and in time for the fall and winter season launches” .
  • Mark Webb: “Our operating model continues to demonstrate its strength and resilience, generating $17 million of free cash flow in the quarter” .

What Went Wrong

  • Gross margin compressed to 68.4% (−210 bps YoY) on a higher mix of markdown sales and elevated promotional rates; tariffs pressured gross margin by ~50 bps .
  • SG&A deleveraged to $88.6M (vs $86.3M LY) on higher store costs, occupancy renewals, shipping, non‑recurring costs, and marketing, partially offset by lower incentive accruals .
  • Adjusted EBITDA declined to $25.6M (vs $30.2M LY), and adjusted diluted EPS fell to $0.81 (vs $1.05 LY), reflecting promotional intensity and tariffs .

Financial Results

MetricQ4 FY24Q1 FY25Q2 FY25
Net Sales ($USD Millions)$142.8 $153.6 $154.0
Gross Margin (%)66.3% 71.8% 68.4%
Operating Income ($USD Millions)$5.1 $19.1 $16.8
Operating Income Margin (%)3.6% 12.4% 10.9%
Adjusted EBITDA ($USD Millions)$14.5 $27.3 $25.6
Adjusted EBITDA Margin (%)10.2% 17.8% 16.6%
Diluted EPS (GAAP, $)$0.14 $0.76 $0.69
Adjusted Diluted EPS ($)$0.32 $0.88 $0.81

Consensus vs Actual – Q2 FY25

MetricConsensusActual
Revenue ($USD Millions)$154.23*$154.0
Primary EPS ($)$0.91*$0.81 (Adjusted)
EBITDA ($USD Millions)$28.88*$25.6

Values retrieved from S&P Global.*

Segment and KPI Detail

KPIQ4 FY24Q1 FY25Q2 FY25
Comparable Sales (YoY %)+1.9% −5.7% −1.0%
Direct Net Sales (% of total)50.5% 46.7% 46.4%
Store Sales (YoY change)−3.0% (calendar impact) −4.4% +0.4%
Ending Store Count252 249 247
Cash from Operations ($USD Millions)$8.1 $5.3 $19.4
Free Cash Flow ($USD Millions)$0.38 $2.61 $16.6
Inventory ($USD Millions)$61.3 $60.6 $55.3
Quarter‑end Cash ($USD Millions)$35.8 $31.2 $45.5
Share Repurchases (Shares/$)19,831 / n.a. 186,800 / $3.5M 68,440 / $1.0M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (YoY)Q3 FY25N/A (no Q3 guide previously)~Flat to down low‑single digits New
Comparable Sales (YoY)Q3 FY25N/ADown low to mid‑single digits New
Adjusted EBITDA ($)Q3 FY25N/A$18–$22M New
Tariff impact (incremental)Q3 FY25+Assumed 10% (ex‑China 30%) ~$5M per quarter; rates avg ~20%; India 50% Raised tariff assumption
Total Capital Expenditures ($)FY25~$25M (Q4 guide) $20–$25M Lowered vs Q4
Net New Stores (units)FY255–10 (Q4 guide) 1–5 Lowered
DividendFY25/Q3$0.08 quarterly (initiated/increased) $0.08 declared payable Oct 1 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY24, Q1 FY25)Current Period (Q2 FY25)Trend
OMS / OmnichannelOMS implemented; ship‑from‑store expected in H2; benefits to sales/margin Ship‑from‑store launched ahead of plan; active fleet‑wide Execution accelerated
AI / TechnologySystems upgrades discussed Building tech roadmap “incorporating opportunities for AI implementation” New AI emphasis
Tariffs / MacroFY25 guide assumed immaterial tariff impact; later assumed 10%/30% in Q1 Landed rates ~20% avg; India 50%; ~$5M quarterly impact embedded Material headwind clarified
MarketingGeo‑targeted tests; maintain spend; revise mix Small local TV test with “tremendous impact”; reshot imagery; widening funnel Broader funnel, testing
ProductStrength in bottoms/outerwear; dresses challenged Evolving assortment, cohesive newness; accessories expansion Assortment refinement
Store presentation—Cleaner color stories, more compelling windows; noted by channel checks Improved presentation
Store growthOpened 5 in Q4; planned 5–10 net adds in FY25 FY25 net adds 1–5; 2 openings in Q3; LT target 50 by 2029 Near‑term moderated, LT intact
Supply Chain / FreightRed Sea routing impacted reported inventory in FY24/Q4 Inventory normalized; reported up ~5% incl tariffs Stabilizing; tariffs primary

Management Commentary

Prepared remarks:

  • “We are confident in our long‑term goal to open 50 stores by the end of 2029” .
  • “Building a strategic technology roadmap, incorporating opportunities for AI implementation… to accelerate growth, gain efficiencies, and improve the customer experience” .
  • “Gross margins are assumed to be down compared to last year, more than experienced in Q2, driven primarily by tariff pressure… approximately $5 million of incremental impact from tariffs [in Q3]” .

Important quotes:

  • Consumer tone: “What we're seeing is the consumer slowly return… as the tariff noise has settled” .
  • Tariffs annualization: “The annualized portion of the $5 million [per quarter] annualizing closer to $20 million” .
  • Pricing/promo strategy: “Strategic pricing actions, as well as tighter promotions, help to offset some level of those tariffs” .
  • Loyalty/Rewards: working on “a reward program that is non‑tender… rolled out in the back half of the year” .

Q&A Highlights

  • Tariffs and margin path: ~$5M quarterly tariff headwind (avg ~20% rates; India 50%); pricing and promo adjustments to offset; EBITDA margin trajectory depends on customer receptivity to price increases .
  • Promotional cadence: Expect tighter promotions vs H1, contingent on acceptance of pricing actions; guidance range captures variability .
  • Marketing and awareness: Small local TV test delivered “tremendous impact”; shifting mix to broaden top/mid‑funnel; more digital and direct interaction .
  • Store and loyalty: Presentation changes noted in stores; non‑tender rewards program targeted for back half rollout .
  • Ship‑from‑store ramp: Fleet‑wide activation; focus on complete shipments to manage costs; expected to convert previously unfulfillable demand and support margins .

Estimates Context

  • Q2 FY25 actuals vs S&P Global consensus: Revenue in line ($154.0M vs $154.23M*), while adjusted diluted EPS missed ($0.81 vs $0.91*), and adjusted EBITDA missed ($25.6M vs $28.9M*) .
  • Prior quarters underscore volatility: Q1 FY25 had gross margin pressure and a −5.7% comps decline amid OMS cutover and consumer pullback, setting a lower base; Q2 showed sequential improvement but tariffs emerge as the new headwind .
  • Implication: Street models likely need to reflect explicit tariff drag (~$5M per quarter) and a wider range of outcomes for Q3 gross margin and comps .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Tariffs are now a quantifiable, near‑term earnings headwind (~$5M per quarter) with landed rates at ~20% (India 50%); monitor vendor offsets, pricing, and promo effectiveness .
  • Q3 guide embeds lower gross margin vs LY and comps down low–mid single digits; downside/upside hinges on customer receptivity to pricing actions .
  • Operational execution is improving: ship‑from‑store live across fleet ahead of plan; expect benefits to sales and margin through better fulfillment and yield management .
  • Marketing pivot to broaden the funnel (TV test, refreshed creative) and a new non‑tender rewards program should support customer file growth without over‑reliance on discounts .
  • Balance sheet/cash generation provide flexibility: $45.5M cash, continued dividend ($0.08/quarter) and buybacks ($20M remaining) even as store growth is moderated near‑term .
  • Long‑term store expansion target (50 by end‑2029) remains intact; near‑term mix shift to quality locations and moderated openings reduces risk while macro improves .
  • Watch for Q3 tariff impact realization, early ship‑from‑store KPIs, and evidence of margin stabilization amid tactical pricing/promo—the key drivers of stock reaction this quarter .