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Q3 Guidance Fell Down And Broke Its Crown, Now J.Jill Stock Is Tumbling After

Q3 Guidance Fell Down And Broke Its Crown, Now J.Jill Stock Is Tumbling After
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J.Jill Inc (NYSE: JILL) shares took a tumble on Thursday after the women's apparel retailer preannounced an earnings shortfall after the market close on Wednesday.

Wells Fargo lowered its  price target for J.Jill from $12 to $10 and reiterated its Market Perform rating on the shares.

At last check, shares of J.Jill were plummeting 50.15 percent to $4.95.

The company lowered its comps expectations from high-single digit growth to -3 percent to -5 percent; earnings per share estimates from $0.18-$0.20 to $0.08-$0.10; and gross margin forecast to a moderate drop as opposed to a slight decline that was previously guided, analyst Ike Boruchow said in a Wednesday note. (See Boruchow's track record here.) 

The guidance is "even more concerning" following a choppy second quarter, marked by a gross margin miss due to unplanned markdown activity, Boruchow said. 

'Something May Have Gone Very Wrong'

The significant deterioration in businesses in the quarter-to-date period is a function of product misses in addition to an ill-timed marketing calendar shift, according to Wells Fargo. J.Jill's preannouncement implies that the business has become  more susceptible to macroweakness across retail, Boruchow said. 

"The real issue is that following their recent IPO, the JILL story was predicated on sustainable, steady MSD-HSD comp growth and margin expansion, meaning that something may have gone very wrong over the past 6 months." 

Citing the preannouncement, tWells Fargo lowered its earnings estimates for 2017 from $0.86 to $0.75 and for 2018 from $0.96 to $0.78.

J.Jill continues to leverage its data-driven model and is well-positioned from a real estate perspective, but its business model is pressured by the highly competitive environment in which it operates, Boruchow said. 

Wells Fargo remains sidelined on the retailer's shares, the analyst said. 

Related Links:
After A Big Q1 Beat, What's J.Jill Doing That Other Apparel Stocks Aren't?
Does J.Jill Have The Right Mix For A Future In Digital Retail?

Latest Ratings for JILL

Jan 2019Wells FargoMaintainsMarket PerformMarket Perform
Nov 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Aug 2018MacquarieMaintainsNeutralNeutral

View More Analyst Ratings for JILL
View the Latest Analyst Ratings

Posted-In: Ike Boruchow Wells FargoAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


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