J.Jill Expects to Shutter More Stores as Potential Bankruptcy Looms
J.Jill is eyeing more store closures as a potential bankruptcy filing hangs over its business.
The struggling womenswear chain yesterday revealed plans to permanently shutter 11 locations this year — most of which are expected to close in the second quarter — for a total of 275 remaining stores by the end of fiscal 2020.
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The announcement was included in J.Jill’s first-quarter report, which noted a net loss of $70.3 million versus the prior year’s income of $4.4 million. Adjusted losses in Q1 were 65 cents per share, compared with the previous year’s adjusted earnings of 10 cents per share. Revenues for the thirteen weeks ended May 2 decreased more than 48% to $91 million.
“Like many other retailers, our first-quarter financial results were significantly impacted by the COVID-19 pandemic as our stores were temporarily closed beginning in mid-March. As we previously disclosed, we took quick and decisive action during the period to leverage our direct channel while focusing on cost management and cash generation,” CEO James Scully said in a statement. “As we look ahead, we are continuing to monitor the evolving macro backdrop while working to strengthen our financial position.”
The company also opted against reporting comparable store sales for the period due to the coronavirus-induced temporary shutdown of its brick-and-mortar fleet. As of today, “essentially all” of J.Jill’s units have reopened to the public. It shared that it shuttered one store in the first quarter and now has a total of 286 outposts across the country.
The financial results came just two days ahead of a crucial forbearance deadline for the chain: Originally set to expire on June 15, the agreement reached last week by J.Jill and its lenders prevents the latter from exercising any rights and remedies against the company until July 30. So long as it remains compliant with the terms of those agreements, J.Jill has until the end of the month to explore various financial options as it continues to grapple with cash flow challenges that have accelerated amid the COVID-19 health crisis.
In mid-July, J.Jill entered into two forbearance agreements after falling out of compliance with certain covenants under its asset-based lending and term loan credit facilities. At the time, the retailer reiterated in a filing with the Securities and Exchange Commission that it faced “substantial doubt” about its ability to continue as a going concern.
To reduce expenses, J.Jill drew down $33 million under its revolving credit facility, as well as furloughed store associates, reduced the base salaries of its executive officers and foregone its board of directors’ fees. At the end of the first quarter, it had roughly $54.8 million in cash.
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