Women's apparel retailer J. Jill (JILL 5.60, -4.32) issued a third quarter earnings warning after Wednesday's close and its stock is paying a heavy price as a result of it -- a really heavy price. Currently, JILL is down 44% in pre-market trading.
The material fallout in the stock price reflects the material downward revision to the retailer's comparable sales and adjusted (non-GAAP) earnings per share guidance.
Specifically, J. Jill said it now expects total company comparable sales to decline between 3% and 5%, versus prior guidance for an increase in the high-single digits, and its adjusted diluted earnings per share to be between $0.08 and $0.10, versus prior guidance of $0.18-$0.20.
The shortcomings are a byproduct of lower than expected sales trends across both its retail and direct channels. The weakness in the direct channel is particularly disturbing since that is an area that is expected by investors to act as an offset to the weakness in brick-and-mortar locations that is affecting many retailers.
With the weakness in both channels, however, it is clear J. Jill didn't have the right product assortment to appeal to its customers. The company seemed to admit as much, saying it identified product and marketing calendar issues that affected its traffic and conversion rates.
J. Jill had its initial public offering in March, yet it has been mostly a struggle for its stock since then. Prior to the warning after yesterday's close, shares of JILL were down 22% from their opening price of $12.75 on March 9.
That hole is going to get much deeper today as the stark third quarter warning is weighing heavily on investor sentiment by creating added concerns about J. Jill's sales and earnings prospects for the upcoming holiday selling season.
J. Jill said it will provide its outlook for the fourth quarter and a revised fiscal 2017 outlook when it reports its third quarter results on December 5.