J Jill (JILL), which just made its IPO debut on March 9, reported its first quarter since returning to the public markets. This J Jill company may sound familiar to some investors. That's because it used to trade publicly more than a decade ago. It has changed quite a few hands in recent years. In 2006, J Jill was acquired by Talbots who later sold it to private equity firm Golden Gate Capital in 2009. Arcapita then took a stake in 2011. Then, a private equity firm based in London, TowerBrook Capital Partners, acquired the company in 2015. It then returned to the public markets once again with its IPO.
Before getting into the quarter, a little background would help. J.Jill is a women's apparel brand focused on affluent customers in the 40-65 age segment. Its typical customer is college educated and has an annual household income above $150,000. JILL enjoys a loyal customer base as 70% of its sales come from customers that have been shopping with J.Jill for at least five years.
Its product assortment is marketed under the J.Jill brand name, sold exclusively through its direct and retail channels, and includes knit and woven tops, bottoms and dresses as well as sweaters, outerwear and accessories across a full range of sizes, including Misses, Petites, Women's and Tall. It also offers most of these products across its two sub-brands, Pure Jill and Wearever. JILL turns over its merchandise frequently, about once a month so that keeps its selection fresh and keeps customers coming back. Approximately 40% new styles are delivered in each monthly collection so that motivates customers to visit more frequently.
JILL operates an omni-channel platform, meaning it has brick-and-mortar stores (currently operates 275 stores mostly in high-end boutique and premium malls), but it also has a large online channel as 43% of its FY16 revenue came from its direct segment (online and catalog).
Online makes up 88% of direct sales, so when we do the calculation, 38% of total revenue comes from online sales which is a lot. Plus, JILL thinks it can get its direct channel up to 50% of sales from the current 43%. With such a strong online presence, JILL seems a bit more insulated from online competitors than most other apparel retailers. What helps is that JILL's products are not sold outside via wholesale to department stores so you need to shop at JILL's stores or its website to get its apparel.
Let's turn to the Q4 (Jan) results. Non-GAAP EPS doubled to $0.08 while revenue rose 14.8% YoY to $166.9 mln. Since the company just came public, analysts have not really created their models so we are not really sure how these numbers compare to market expectations. However, with the stock higher today, it seems investors like the results.
Total company comparable sales (same store comps) in JanQ, which includes comparable store sales and direct to consumer comparable sales, increased by +10.8%, which is quite good. For all of FY16, comps were a robust +11.2%. Direct segment (online and catalog) sales in JanQ represented 48.8% of total sales, up from 46.1% in the prior year period.
Looking ahead to Q1 (Apr), JILL expects total comparable sales to increase in the high single digits. Non-GAAP EPS is expected in the $0.17-0.19 range. For the full 2017 fiscal year, JILL expects total comparable sales to increase in the high single digits.
In sum, the stock is trading modestly higher so it seems the market is pleased with the JanQ results and guidance. Overall, it was a decent first quarterly report since the IPO.