J.Jill Slashes Its Retail Outlook

J.Jill Slashes Its Retail Outlook

1. 'We are very disappointed,' J.Jill CEO says as retailer slashes outlook, shares tank more than 40%

2. J.Jill lowered its expectations for fiscal third-quarter earnings and same-store sales.

3. The apparel retailer has cited a lack in sales of woven tops, and a failed attempt to keep August merchandise on the floors of stores for an additional week.

4. Some analysts are saying there's still hope for J.Jill to turn sales around ahead of the all-important holiday shopping season.

On the heels of its March initial public offering, J.Jill offers an example of just how difficult it is to be an apparel retailer today, as forecasting where shoppers will spend their dollars is becoming increasingly uncertain.

The Quincy, Massachusetts-based company slashed its expectations for same-store sales in the fiscal third quarter, now calling for a decline of between 3-5%. Initially, J.Jill had forecast comparable sales to be up in high single digits.

J. Jill shares were down more than 49% the day of the revised financial outlook announcement. "We have experienced a lower than expected sales trend across both our retail and direct channels, and are updating our guidance for the quarter," J.Jill President and CEO Paula Bennett said in a statement. "We have been assessing the change in trend and have identified product and marketing calendar issues that are affecting traffic and conversion, and we are reacting quickly," Bennett added.

The company cited a lack of sales of woven tops - where it had made a significant inventory investment - and a failed attempt to keep August merchandise on the floors of stores for an additional week, which didn't turn out as planned.

In turn, J.Jill also lowered its expectations for fiscal third quarter earnings, now calling for adjusted earnings per share of between 8 cents and 10 cents. That compares with a prior forecast of 18 cents to 20 cents.

While the news won't be received lightly by the Street in the short term, some analysts are saying there's still hope for J.Jill to turn sales around ahead of the all-important holiday shopping season. "We see the miss as largely explainable, and believe the company is sufficiently nimble to address the missteps in short order," said Jefferies analyst Randal Konik. As J.Jill refreshes and remodels existing stores, expands its size assortments and 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 the announcement came as a surprise to many. Bennett said she was "very disappointed" to have to make the adjustments.

Mall-based apparel competition has hurt many of J.Jill's peers, such as The Limited, Wet Seal, Vanity, BCBG Max Azria and Rue 21, all of which have filed for bankruptcy protection this year. But J.Jill has made strides to set itself apart - especially from low-price retailers - by targeting affluent women with an average household income of US$ 150,000. The company also touts having a loyal customer base, with extensive data on its shoppers.