J.Jill Reports 23% Profit Drop in Q2

Key Points

• Net sales (GAAP) declined 0.8% to $154.0 million in Q2 FY2025, as year-over-year sales pressures persisted despite monthly improvement.

• Adjusted net income per diluted share dropped 22.9% to $0.81 in Q2 FY2025, compared to $1.05 in Q2 FY2024.

• Free cash flow (non-GAAP) increased 17.7% to $16.6 million in Q2 FY2025, but management’s Q3 outlook anticipates flat to lower sales and further margin pressure from tariffs.

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J.Jill (NYSE:JILL), a specialty retailer focused on apparel and accessories for affluent women over 45, reported second quarter results on September 3, 2025, for the period ending August 2, 2025. The release showed net sales (GAAP) of $154.0 million in Q2 FY2025, a modest year-over-year decline of 0.8%, which was slightly better than the sharper drop recorded in the previous quarter. Adjusted net income per diluted share was $0.81 in Q2 FY2025, compared to $1.05 in Q2 FY2024, while Adjusted EBITDA decreased 15.3% to $25.6 million in Q2 FY2025. Gross margin compressed by 2.1 percentage points to 68.4% in Q2 FY2025, and the company’s outlook for Q3 FY2025 indicates that flat to declining sales and continued tariff cost headwinds will persist. The period showed signs of stabilization compared to a challenging first quarter, but key profit and top line figures continued to lag prior year performance.

About the Business and Strategic Focus

J.Jill is a U.S. women’s apparel retailer that targets financially secure women aged 45 and older, a segment that it describes as underserved. The business operates through retail storefronts as well as a direct-to-consumer platform, aiming to offer quality, comfort, and inclusivity across its clothing and accessories lines. Its specialized approach has resulted in a customer base known for loyalty and repeat engagement, supported by tailored marketing and frequent product updates.

Recently, the company has concentrated on five main areas. First, it looks to deepen engagement with its core customer, whose brand loyalty and spending power are the engine for sales. Second, J.Jill invests in an omnichannel model, blending in-store and online experiences. Product assortment and design improvements are a priority, with regular new collections and in-house design capabilities. Data and analytics play a growing role, leveraging customer insights to fine-tune both marketing and merchandise. Lastly, J.Jill works to sustain a flexible global supply chain, with sourcing strategies and supplier diversity designed to manage risk and cost. These areas are key to driving future growth and margin improvement.

Quarterly Highlights: Performance, Pressures, and Trends

The company’s net sales (GAAP) dipped slightly to $154.0 million in Q2 FY2025, which was a softer year-over-year decline than it experienced in the prior quarter. Comparable sales, a measure tracking performance in stores open at least one year and direct-to-consumer results, were down 1.0% in Q2 FY2025. This narrow decline shows improvement from last quarter’s steeper comp drop but highlights continued sluggishness in customer demand. Direct-to-consumer sales—J.Jill’s e-commerce and catalog channel—represented 46.4% of total revenue in Q2 FY2025 and declined 2.2% year over year, suggesting that even online engagement saw pressure. Store traffic, however, improved as customers responded positively to seasonal promotions.

Margins took a notable step down. Gross margin (GAAP) decreased to 68.4% in Q2 FY2025, down 2.1 percentage points from the same quarter last year. Selling, general, and administrative expenses (SG&A) also increased both in absolute dollars and as a percent of sales in Q2 FY2025 (GAAP), influencing Operating income fell to $16.8 million in the second quarter of fiscal 2025, down from $23.0 million in the second quarter of fiscal 2024. The adjusted EBITDA margin—a key profitability indicator for retailers equating earnings before interest, taxes, depreciation, and amortization to total sales—fell to 16.6% from 19.4% in Q2 FY2025, demonstrating that the company’s earnings base is under strain.

Profitability saw opposing trends on a reported (GAAP) versus adjusted (non-GAAP) basis. Net income for the second quarter was $10.5 million, up from $8.2 million in the prior year; however, the previous period contained one-time debt extinguishment costs. Excluding these, the company’s adjusted net income per diluted share was $0.81 in the second quarter of fiscal 2025, down from $1.05 in the second quarter of fiscal 2024. J.Jill’s free cash flow—a non-GAAP measure of cash available after operational expenses and capital investments—rose 17.7% to $16.6 million in Q2 FY2025, even as working capital needs and inventory levels increased year over year. Store count stood at 247 at the end of Q2 FY2025, reflecting a slight net increase over the previous twelve months.

The retailer’s product portfolio spans its core, in-house designed apparel, including sub-brands such as Pure Jill (relaxed sportswear), Wearever (travel-friendly collection), as well as footwear and accessories. The company updates its merchandise regularly across nine seasons per year and offers inclusive sizing, which appeals to its niche customer base. In the earnings release, management commented on evolving the product assortment and enhancing the customer journey but did not provide specifics on recent launches or category performance.

The direct-to-consumer channel’s share of total revenue was lower than a year ago, suggesting that physical stores regained some ground even as e-commerce traffic slowed. J.Jill closed two stores during Q2 FY2025 and focused on steady omnichannel integration, though Inventory ended Q2 FY2025 at $55.3 million, up 5% from Q2 FY2024—a level management believes is more closely aligned with current sales trends after active inventory management during the season.

The company maintained its regular quarterly dividend of $0.08 per share. It also repurchased $1.0 million of its own shares in Q2 FY2025. These actions suggest continued commitment to returning capital to shareholders. The dividend policy remains unchanged.

Looking Forward: Guidance and Key Watch Items

For the third quarter of fiscal 2025, management forecasts net sales to be roughly flat to down in the low-single digits year over year. Comparable sales are expected to decline in the low- to mid-single digits. Tariffs are anticipated to add $5.0 million in incremental cost pressure, with adjusted EBITDA forecasted in a range of $18.0 million to $22.0 million. There were no changes to the outlook for capital expenditures ($20.0–$25.0 million for FY2025) or plans for modest net store growth.

Management did not provide full-year guidance, continuing the cautious stance adopted last quarter. Investors should keep an eye on the management of inventory relative to demand, and the response to ongoing tariff headwinds. Progress on digital initiatives, customer file expansion, or new product categories—areas discussed in past quarters—were not given concrete updates. Overall, although the company continues to generate free cash flow and maintain its capital return policy.

JILL does currently pay a dividend. The quarterly dividend was maintained at $0.08 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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