William Blair initiated research coverage of J.Jill, Inc. (JILL $26.12), an omnichannel retailer of women’s apparel, accessories, and footwear.
Analyst Dylan Carden estimated that the company would generate revenue of $602.2 million in fiscal 2023 (ending January 2024), $611.5 million in fiscal 2024, and $634.7 million in fiscal 2025, along with EPS of $2.83, $3.50, and $3.76, respectively.
“After a rough entry into the public markets, J.Jill, under new management, has been righting the ship for the last three years,” Carden said. “J.Jill has emerged from the 2016-2019 era as an altogether healthier company arguably more in tune with its age by not striving for outsized growth while still having some ground to cover. J.Jill has a relatively simple model, now stabilized: roughly 250 stores, U.S. only; close to a 50:50 online-to-retail split; and a financially sound, highly loyal customer. The fundamental advantage J.Jill management has instilled since taking over in 2021 is greater discipline around inventory, getting to a more controlled position to stimulate demand at full price selling.”
Carden continued, “Proving out this strategy, gross margins have surpassed prior peaks with better turns and a cleaner online promotional channel. From here, J.Jill will start growing stores again after having closed over 15% in the last three years, while leaning into opportunity to better engage the younger end of its target demographic and leverage its plus category. Gross margins are more fully baked, with modest if not conservative further operating margin stemming from return of positive comp and investments in more efficient systems. In total we are modeling low-single-digit sales growth, 10% earnings growth, and a FCF yield approaching 20% over the next five years.”
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