J.Jill's Q2 2025: Contradictions Emerge on Tariff Impact, Customer Initiatives, and Promotional Strategies

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 3, 2025

Financials Results

• Revenue: $154M, down 0.8% YOY
• EPS: $0.81 per diluted share (adjusted), versus $1.05 in Q2 2024
• Gross Margin: 68.4%, down ~210 bps YOY; ~50 bps tariff pressure

Guidance:

• Q3 adjusted EBITDA expected at $18M–$22M.
• Q3 sales about flat to down low single digits; comps down low to mid-single digits.
• Q3 gross margin down YOY, more than Q2, primarily from tariffs.
• Tariffs: ~+$5M impact per quarter net of vendor offsets; current rates avg ~20% (India 50%).
• Actions: vendor negotiations, strategic pricing/promotions; 2H unit receipts bought down mid-single digits.
• FY25 capex: $20M–$25M.
• FY25 stores: 1–5 net new; two openings late Q3.
• Capital returns: $0.08 dividend on Oct 1; ~$20M remaining under $25M repurchase.

Business Commentary:

* Sales Performance and Inventory Management: - J.Jill reported total sales down less than 1% and adjusted EBITDA of $25.6 million in Q2 2025. - This improvement in sales trends was driven by increased promotional activity, strategic inventory alignment, and a focus on inventory to sales trends.

• Impact of Tariffs on Costs:
• J.Jill's gross margin was 68.4%, down 210 basis points versus Q2 2024, with approximately 50 basis points related to tariffs.

• The company is working multiple levers to mitigate the impact of tariffs, including negotiating offsets with vendors and adjusting order quantities.

• Customer Engagement and Marketing Strategy:

• J.Jill is expanding its marketing mix to engage a wider audience and capture the full marketing funnel.

• The company conducted a small test with television advertising and is considering the balance across marketing channels to attract new customers.

• Digital Transformation and Omnichannel Capabilities:

• J.Jill successfully implemented its new Order Management System (OMS), enabling them to launch ship-from-store capabilities ahead of schedule.

• This initiative supports sales growth and enhances gross margins by fulfilling previously unfulfillable demand.

• Strategic Product and Assortment Strategy:

• J.Jill is focusing on evolving its product assortment to attract new customers and reengage those who haven't shopped with them recently.
• The company is expanding its accessories business and refining its marketing approach to broaden appeal and drive profitable growth.

Sentiment Analysis:

• Sales trends stabilized and improved into June/July; total sales down <1%. Gross margin fell 210 bps YOY due to higher markdowns/promos and ~50 bps tariffs. Q3 outlook: sales flat to down slightly, comps down, and gross margins down more than Q2 from tariffs. Management highlighted strong free cash flow, clean inventories, ship-from-store rollout, and initiatives to grow the customer file.

Q&A:

• Question from Jungwon Kim (TD Cowen): What drove improvement in June/July, and how should we think about the annualized tariff impact?
  Response: Improvement came from clearance/promotions driving traffic and conversion; tariffs add about $5M per quarter (~$20M annualized) net of vendor offsets, with further mitigation via pricing, promotions, and order adjustments.

• Question from Jungwon Kim (TD Cowen): Will 2H promotional levels be in line or elevated versus last year?
  Response: Plan is tighter promotions with strategic pricing to offset tariffs; guidance range reflects uncertainty in customer receptivity to price increases.

• Question from Corey Tarlowe (Jefferies): After 100 days, where are the biggest opportunities and what’s working now?
  Response: Primary focus is growing the customer file via product evolution, enhanced customer journey/marketing mix (including TV test), and improved ways of working; near-term refinements with a larger assortment reset aimed at 2026.

• Question from Corey Tarlowe (Jefferies): Beyond tariffs, what are margin puts/takes in 2H and the path to sustaining high-teens EBITDA margins?
  Response: Tariffs are the main headwind; offset via strategic pricing, disciplined promotions, and leaner inventories; invest to expand customer file and assortment while remaining cash generative to support long-term profitable growth.

• Question from Janine Hoffman Stichter (BTIG): How is your consumer today outside of promo-driven noise in Q2?
  Response: Consumer is slowly returning with sequential improvement; optimism into Q3 as tariff noise has settled.

• Question from Janine Hoffman Stichter (BTIG): Will back-half promotions be up or down year over year?
  Response: Depends on acceptance of price increases; high end of outlook assumes good acceptance, low end assumes more resistance.

• Question from Marni Shapiro (The Retail Tracker): With POS upgrades, will you modernize Inspired Rewards to expand your base?
  Response: Yes—developing a non-tender rewards program to launch in the back half; current J.Jill credit card remains highly penetrated.

• Question from Marni Shapiro (The Retail Tracker): Thoughts on social media content and real-life events after your TV test?
  Response: TV test was small but impactful; marketing mix will shift toward more digital and direct engagement, with back-half tests to drive awareness and new customer acquisition.

• Question from Marni Shapiro (The Retail Tracker): Have stores changed visually without changing product?
  Response: Yes—refreshed presentations in-store/online with cleaner color stories and more compelling windows, yielding positive response.