J.Jill, Inc. Utilizes Proceeds From $31 Million Primary Equity Offering to Pay Down Debt

Rhea-AI Summary

J.Jill has used the net proceeds of $31 million from its primary equity offering on June 14, 2024, to make a voluntary debt repayment. On June 21, 2024, the company repaid $27.2 million in principal, reducing its term loan balance to approximately $81 million. Along with the principal, J.Jill paid accrued interest and a 3% voluntary premium, totaling $28.8 million. CEO Claire Spofford emphasized that this move aims to de-lever the balance sheet and reduce interest expenses, aligning with their capital allocation priorities to achieve positive net cash while continuing to invest in growth.

Positive

• Used $31 million equity offering proceeds to reduce $27.2 million in principal debt.
• Reduced term loan balance to approximately $81 million.
• Aimed to de-lever balance sheet and reduce interest expenses.
• Total payment made was $28.8 million including accrued interest and 3% voluntary premium.

Negative

• Debt repayment included a 3% voluntary premium, adding to the financial burden.

Insights

Financial Analyst

J.Jill, Inc.'s decision to utilize proceeds from a $31 million primary equity offering to pay down debt is a strategic move that can significantly impact its financial stability. By repaying $27.2 million of principal debt, the company has reduced its term loan to roughly $81 million. This reduction in debt will likely lead to lower interest expenses moving forward, improving the company's net income margins.

Moreover, the decision to include a 3% voluntary premium indicates a proactive approach to debt management. Paying accrued interest and the premium upfront reflects a commitment to financial health and could enhance the company's credit rating, making future borrowing potentially cheaper.

For investors, this move demonstrates a disciplined approach to capital allocation. It shows that J.Jill is focused on long-term debt reduction and financial sustainability, which can be attractive qualities in a volatile market. This strategy may also increase shareholder value as the company positions itself to operate with positive net cash over time, providing a buffer against economic downturns.

Market Research Analyst

From a market perspective, J.Jill's action of using equity offering proceeds to pay down debt can be seen as a positive signal to the market. This move reduces financial risk, which is critical for retail companies that often face fluctuating market conditions. By lowering its debt, J.Jill might be better positioned to invest in growth initiatives, such as expanding its product lines or enhancing its e-commerce platform.

Retail investors should note that paying down debt also improves the company's debt-to-equity ratio, making it financially healthier in the eyes of potential institutional investors. This can lead to higher stock valuations as institutions generally favor companies with a stronger balance sheet.

Additionally, executing a primary equity offering successfully suggests a level of confidence from the market in J.Jill's future prospects. The ability to raise substantial funds ($31 million) indicates investor faith, which can be a reassuring sign for current and potential shareholders.

QUINCY, Mass.--(BUSINESS WIRE)-- J.Jill, Inc. (NYSE:JILL) today announced that it has executed a voluntary debt principal payment using net proceeds to the Company of $31 million from its primary equity offering completed on June 14, 2024.

The debt principal repaid on June 21, 2024 was $27.2 million, which reduced the amount outstanding under the Company’s term loan to approximately $81 million. In addition to the principal, accrued interest and a 3% voluntary premium were paid resulting in a total payment of $28.8 million.

Claire Spofford, President and Chief Executive Officer of J.Jill, Inc. stated, “We are pleased to deploy the proceeds from our equity offering to further de-lever our balance sheet and reduce interest expense. Through this step and our ongoing commitment to our capital allocation priorities, we believe we are well positioned to achieve our goal of operating with positive net cash over time while continuing to invest in our growth.”

About J.Jill, Inc.

J.Jill is a national lifestyle brand that provides apparel, footwear and accessories designed to help its customers move through a full life with ease. The brand represents an easy, thoughtful and inspired style that celebrates the totality of all women and designs its products with its core brand ethos in mind: keep it simple and make it matter. J.Jill offers a high touch customer experience through over 200 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston. For more information, please visit www.jjill.com or http://investors.jjill.com. The information included on our websites is not incorporated by reference herein.

Forward-Looking Statements

This press release contains, and oral statements made from time to time by our representatives may contain, “forward-looking statements.” All statements other than statements of historical facts contained in this press release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, expected market growth and any activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. Such statements are often identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects,” “goal,” “target” (although not all forward-looking statements contain these identifying words) and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on our current expectations and assumptions regarding capital market conditions, our business, the economy and other future conditions and are not guarantees of future performance. Because forward-looking statements relate to the future, by their nature, they are inherently subject to a number of risks, uncertainties, potentially inaccurate assumptions and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in any forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, including risks regarding: (1) our sensitivity to changes in economic conditions and discretionary consumer spending; (2) the material adverse impact of pandemics or other health crises on our operations, business and financial results; (3) our ability to anticipate and respond to changing customer preferences, shifts in fashion and industry trends in a timely manner; (4) our ability to maintain our brand image, engage new and existing customers and gain market share; (5) the impact of operating in a highly competitive industry with increased competition; (6) our ability to successfully optimize our omnichannel operations, including our ability to enhance our marketing efforts and successfully realize the benefits from our investments in new technology, for example our recently implemented point-of-sale system and the forthcoming upgrade to our order management system; (7) our ability to use effective marketing strategies and increase existing and new customer traffic; (8) any interruptions in our foreign sourcing operations and the relationships with our suppliers and agents; (9) any increases in the demand for, or the price of, raw materials used to manufacture our merchandise and other fluctuations in sourcing and distribution costs; (10) any material damage or interruptions to our information systems; (11) our ability to protect our trademarks and other intellectual property rights; (12) our indebtedness restricting our operational and financial flexibility; (13) our ability to manage our inventory levels, size assortments and merchandise mix; (14) our status as a controlled company; and (15) other factors that may be described in our filings with the Securities and Exchange Commission (the “SEC”), including the factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024. You are encouraged to read our filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. We caution investors, potential investors and others not to place considerable reliance on the forward-looking statements in this press release and in the oral statements made by our representatives. Any such forward-looking statement speaks only as of the date on which it is made. J.Jill undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240624382344/en/

Investor Relations:

Caitlin Churchill

ICR, Inc.

investors@jjill.com

203-682-8200

Business and Financial Media:

Ariel Kouvaras

Sloane & Company

akouvaras@sloanepr.com

973-897-6241

Source: J.Jill, Inc.

FAQ

What did J.Jill do with the proceeds from its $31 million primary equity offering?

J.Jill used the $31 million proceeds to make a $27.2 million voluntary debt repayment.

When did J.Jill complete the debt repayment?

J.Jill completed the debt repayment on June 21, 2024.

What was the remaining balance on J.Jill's term loan after the repayment?

The remaining balance on J.Jill's term loan was approximately $81 million.

Why did J.Jill choose to repay its debt?

J.Jill aimed to de-lever its balance sheet and reduce interest expenses.

What additional costs were involved in J.Jill's debt repayment?

J.Jill's debt repayment included accrued interest and a 3% voluntary premium, totaling $28.8 million.