J. Jill Inc. has bought itself some time as it continues to struggle amid fallout from the COVID-19 pandemic.
The apparel retailer has entered into two forbearance agreements on loans after breaching a covenant related to its total leverage ratio. The agreements come after the apparel retailer warned in a filing that "uncertainty created by recent events generate scenarios that raise substantial doubt about our ability to continue as a going concern within one year."
Under the agreements, J. Jill's lenders won't exercise any rights or remedies available under the original loan terms until July 16 so long as it remains otherwise in compliance with its credit facilities and the terms of the forbearance.
“These forbearance agreements will allow us to continue to work with our lenders on a course of action that will resolve the company’s noncompliance and position the company to realize its long term plans,” said interim CEO Jim Scully. “We appreciate the patience and support of our associates, vendors and suppliers.”
Similar to Francesca’s, which has warned that it might file for bankruptcy, J. Jill was struggling pre-pandemic. The company swung a $128.6 million net loss for 2019, compared to $30.5 million in profit the previous year. Its turnaround efforts were disrupted as its stores went dark due to COVID-19.
J. Jill said it recently re-opened approximately 85% of its stores with enhanced health and safety protocols, “and our initial results have exceeded our expectations driven by our dedicated and loyal customer base and committed associates.”
The retailer ended May 2020 with a cash balance of approximately $60 million.
“The company has strong liquidity to meet its financial obligations reflected by our cash balances at the end of May and appreciates the partnership of its vendors and suppliers,” said CFO Mark Webb.