Exclusive: Q&A with J.Jill CEO
A little over a year ago, J.Jill was fighting for survival, trying to keep afloat amid the flood of bankruptcies in specialty retailing. Many people speculated that the 62-year-old women’s apparel brand, which sells nearly all of its merchandise under its own exclusive label, would not survive.
But in September 2020, interim CEO Jim Scully pulled J.Jill out of its financial mess by negotiating a debt restructuring plan with the company’s lenders. The plan allowed the chain to get its finances in order without having file for bankruptcy. Shortly after it was announced, J.Jill appointed Claire Spofford as CEO.
Spofford took the reins of the company in February 2021. Prior to joining, she served as president of Qurate’s Cornerstone Brands, overseeing Ballard Designs, Frontgate, Garnet Hill and Grandin Road. Before that, she held executive positions at Orchard Brands and Timberland. She even did a brief stint at J.Jill, as senior VP and chief marketing officer.
Since taking the top position at J.Jill, Spofford has led a reset of a brand known for its casual, comfortable clothes that are stylish without being overtly fashion-forward. It’s a look that appeals to a target customer who is educated, affluent and on the other side of 40.
Under Spofford’s watch, J.Jill has remained true to its target customer while moving to a greater emphasis on full-price selling. Inventory has been reduced and there is a new focus on gross margins.
“J.Jill had been in a situation, historically, where it chased the top line to the detriment of gross margins,” Spofford explained. “There was a less than an optimum mix of full price to mark-down selling. Now, we are really focused on the gross profit.”
The strategy appears to be working. J.Jill’s second-quarter gross profit was $109.4 million, up $54 million compared to the year-ago period and up $4 million compared to the second quarter of 2019. Its gross margin was 68.7%, up 930 basis points over the second quarter of last year and up 1,040 basis points compared to the same period in 2019.
“Also, as reported in the second quarter, we have been seeing sequential improvements quarter over quarter and month over month in terms of retail traffic,” Spofford said.
In the Q&A below, Spofford discusses the changes at J.Jill, the company’s strengths, and what lies ahead.
A little over a year ago, it didn't appear all that certain that J.Jill would make it. How did the company overcome the challenges it faced?
I think the debt restructuring that was put in place later in the year [September 2020] and the hard work that went into it, along with the belief all of the stakeholders had in the potential of the brand, combined to keep people focused and make sure that it was able to restructure and not file. We were able to come out in a place where we could reset and rebuild the business, which is what we’ve been focused on this year.
What are the key actions you have taken since becoming CEO?
We have changed the business model from an historic one that was focused on top-line growth rather than gross margin, which led to over-inventorying and the need to promote to move through it.
Now, we are focused on inventory management and tightening up some of the disciplines in the business and how we manage it. We’re not overbuying, which would put us in the position of having to promote extensively. We don’t promote out of the gate with new assortments. These are the things that we’ve emphasized as we tightened the business model and charted our course forward.
Also, when you’re trying to sell at full price, it’s very distracting to the customer to have a lot of markdown inventory to move through as well. We are competing for her wallet and her share of mind. We want her to be focused on our great product and brand stories as opposed to constantly having to work through lots and lots of markdown inventory.
As a result, we are very focused as a team on disciplined inventory management, with a relentless focus on gross margin and on full-price selling.
How do J.Jill’s sales break down between channels?
Direct sales as a percentage of total sales were 46% in the second quarter. Our business tends to hover around the 40% to 50% range.
I feel very lucky that we have a balanced business model of direct-to-consumer and brick-and-mortar sales. Not only does it allow us to manage the business, it allows our customer to shop with us when and where she wants to. We are fortunate in that we are not overstored. But we have stores in a lot of the key markets where customers want them.
How have the changes you’ve implemented impacted the stores?
From a merchandising strategy standpoint, we had always come out with floor sets — a big brand reveal — once a month, which we supported with lots of marketing and a catalog drop. By mid-month, we would support it again with more marketing and another catalog drop. But you still get diminished returns. Also, we were promoting significantly right out of the gate, so we didn’t give products a chance to sell-through at full price.
But now we’ve stretched our floor sets out to nine major ones, which we augment with newness capsules on a regular basis, every one or two weeks. It could be a capsule of our core collection or of one of our sub-brands, such as Pure Jill. It could also be a digital-only capsule. But we are flowing in newness much more regularly and supporting it more digitally from a marketing standpoint.
What is J.Jill’s fashion positioning?
Our value proposition is grounded in a premium casual aesthetic, with a fabric-first approach. We feel great about our materials and fabrications.
Our assortment is grounded in wonderful basics such as pima knits, linens and some of our other core franchises — things that our customer comes back to us for season after season and year after year. But it’s balanced with a nice focus on novelties. These are items with prints and embroideries … items that are more fashion-oriented and flow in and out of our assortment on a regular basis. This newness is something we’ve also been very focused on this year.
Any plans to expand into any new merchandise categories
We believe we have the opportunity to grow some of our segments faster within our overall existing portfolio. We saw great strength across the board this past year, but we saw exceptional strength in our Pure Jill collection. We also had incredible growth in our Fit collection. These are areas where we can drive organic growth.
How would you describe the typical J.Jill customer?
This is another area where I feel we are very fortunate. We have a very loyal customer. Once she discovers us and experiences our product and our service, she tends to stay with us.
In general, our customer is 45-plus and well educated. She over-indexes not just for a college degree but a graduate degree. She is relatively affluent and that keeps us on our toes because she can pretty much shop where she wants to. We have to do a good job of giving her great product season after season and making sure her experience is terrific.
How have the ongoing supply chain problems impacted the company?
We are managing through it. We have really good relationship with our suppliers and are talking to them every day. The team is very focused on the flow of products and real-time information about the same. We signaled in our second-quarter earnings release that we will see some impact to gross margins in the back half of the year due to rising logistics costs.
From a design and merchandising standpoint, our teams have done a great job of making sure our color palettes transition well from one to the other. So that if certain pieces of the assortment come in later, we can still tell a very beautiful and compelling story online and on the floor of our stores.
How do you feel about J.Jill's positioning for the holidays?
I think our team is doing a terrific job of optimizing what we can optimize and controlling what we can control. I feel confident that we will still look beautiful for our customers.
Is the business experiencing the labor shortage that so many retailers are currently dealing with?
We are challenged like everyone else in terms of hiring for the holiday season in our distribution center and making sure that we have the team in place to service the customers to our standards. But we are making good progress against it.
We’re very fortunate in that we have good retention of our store associates for specialty retail and I think that comes from a few places. Our store associates have a deep connection not just with our brand, but with our customers specifically. They know the customers and they understand their lives. There is a real connection there that helps us with employee retention.
And the other very interesting thing, which I just love, is that a lot of our store associates are people who had other careers but were J.Jill customers. They love the brand and when they retired or chose to do something different, they came to work in our stores. It’s a terrific dynamic.
How many stores will J.Jill close this year...and what about going forward? Will there be any store openings?
We signaled in our second quarter earnings release that we anticipate closing about 20 stores this year. But we are not closing stores because we are overstored. We are closing them because of opportunities in the current environment to make sure we have the right economics going forward.
We will always be optimizing our retail portfolio, whether that means negotiating and re-negotiating leases, closing stores or opening stores. We do feel there is potential for store unit growth going forward as well.