Good morning. My name is Jack and I will be your conference operator today. At this time, I would like to welcome everyone to the J.Jill Fourth Quarter 2019 Conference Call. On today’s call are Jim Scully, Interim CEO of J.Jill, Inc. and Mark Webb, Executive Vice President and CFO. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will a question-and-answer session. [Operator Instructions] Before we begin, I need to remind you that certain comments made during this call may constitute forward-looking statements and are made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and J.Jill’s SEC filings. The forward-looking statements made today are as of the date of this call and we do not undertake any obligation to update any forward-looking statements. Finally, we may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation schedule showing the GAAP versus non-GAAP financial measures is available in our press release issued today. If you do not have a copy of today’s press release, you may obtain one by visiting the Investor Relations page of our website at jjill.com. I will now turn the call over to Jim.

Thank you and good morning, everyone. As you saw in our press release this morning, we delivered fourth quarter performance above our revised expectations and made progress against our initiatives, including ending the year with the lower inventory balance and more importantly, with enhanced disciplines in place to continue to actively manage our in-season and pre-season inventory levels. While our January same-store sales were solid, it’s much too early to call this a new trend in the business. Mark will review our results in more detail in a moment, but before he does that, I would like to take you through my thoughts in the quarter and what we are doing to position J.Jill for future success. First, with regard to performance, 2019 was a challenging year for J.Jill and we are disappointed with our results. With that said, it’s clear that there are opportunities that continue to lie ahead for the brand once the business has stabilized. The key tenants that have made J.Jill a success are in place, and in most cases, remained strong. We serve as a remarkable, growing and yet underserved demographic. We have a right-sized store fleet, great penetration of online and a loyal customer who values both channels as ways to interact with the brand. It is also clear to me since taking the Interim CEO role that the foundational support that was needed to bring the brand forward to its next stage of growth was not fully implemented. That is the work that Mark and the team began when he joined instilling greater discipline around inventory management. I am also working with the teams to improve cross-functional decision-making within the organization to position the brand to truly reap the benefits of our great assets, most importantly, our customer. Included in this work is…

Thank you, Jim and good morning everyone. As Jim mentioned, the fourth quarter overall was challenging, but we continue to make progress stabilizing the business. We have improved operating practices around the planning and management of inventory instilling greater discipline into pre-season buy decisions and adjusting the metrics and meetings around in-season inventory management discussions. Earlier this year, we took action on overhead costs, including payroll, general operating expenses and occupancy, which continued to generate savings in the fourth quarter. We believe there is still more operational efficiencies to be realized in this business over time. As it relates to fourth quarter performance, December performance better than November while our late January performance exceeded expectations. In terms of unit inventory buys, the January and February floor sets which arrived later in the quarter were the first pre-season buy quantities we were able to better align with demand, but November, December and earlier floor sets were bought too deep, while overall inventories are in a better position as we enter 2020. We will continue to work down these older season markdowns in Q1 as we mixed more appropriately sized new full price floor sets going forward. Getting inventory buys right is a first and critical step to stabilizing the business and we are making good progress. Let me now turn to our results. My discussion today will include adjusted non-GAAP metrics, which exclude cost associated with the CEO transition and additional non-cash goodwill and intangible asset impairment charges of $36 million taken in the fourth quarter. Please see today’s press release for more details on our Q4 and full year financial performance, including reconciliations of our non-GAAP to GAAP metrics. For the fourth quarter, total net sales were $168 million, down 1.7% versus last year’s $171 million. Total company comparable sales…

[Operator Instructions] Paul Trussell with Deutsche Bank, your line is open.

Hi, good morning. This is actually Krisztina Katai on for Paul. So, congrats on the better results, you have delivered in the fourth quarter, but are guiding first quarter down in the same-store sales for 3% to 5% when the year ago comparison is admittedly easier than it was in the fourth quarter and you said that January comp trends were solid. So, I guess my question is how should we think about the comp progression over the year and what do you think it takes to see the top line stabilize and return to positive trends?

Hi, Krisztina. It’s Mark. I will jump in on that. First, I think it’s most important to call attention to the total year strategy, which really is for 2020 a focus on gross profit recovery first versus sales stabilization and growth. And I think that’s an important distinction given coming off of the year where we know we had challenges, a lot of which driven by quantities of inventory that we have receded. We are committed in 2020 to bringing inventories more inline and you saw at the end of Q4 some evidence of progress on that. So, really, the plan is to first stabilize gross profit that’s the plan for 2020. And I think as with respect to cadence through the year and we mentioned it in the remarks, the second quarter of last year is where we really began to action and react to the inventory issues we had coming into that quarter and through the rest of the year. So, in terms of Q1 of last year from a gross margin perspective if you look at Q1 into Q2, the Q2 performance sort of speaks to the actions we took and so that’s why we mentioned that the first half should sort of normalize some of that volatility out.

Got it. Thank you. That’s really helpful. And again, my second question will be on gross margin, you are doing a lot of good things there to right-size inventories, improve turns and just overall speed things up. And I think the 200 basis point expansion is really encouraging. So I guess I wanted to ask what are some of the pressures that you are still seeing whether it’s tariffs, overall macro or mall promotion that could really continue to offset these initiatives?

Yes. So, we have as you mentioned we guided to the 200 basis point improvement. Our overall guidance we did mention it in the remarks has some level of caution baked into it relative to the initiatives that we have underway to stabilize the business, which entails migrating from a promotional environment to a less promotional environment, also migrating to new – the designs of our new design team to the current design team, right, but those designs are now coming into the stores as well as the macro uncertainty that’s out there relative to the coronavirus etcetera. And what we really try to do is take a cautious stance primarily in our guidance related to potential supply chain disruptions that may exist versus trying to quantify any consumer demand side risk that would be in that guidance.

Got it. And if I may follow-up, you guys still have a big sourcing operation out of China, how do you gauge the current situation in terms of supply chain disruptions and how quickly can you move some of those products to maybe other countries where you could source from?

Yes. So the interesting thing that teams here have made great progress minimizing the sourcing of finished goods out of China to the extent where it’s not really that much of an issue for us anymore in terms of finished goods. The reality is that components of the supply chain are still heavily dependent upon China originations things like fabric, etcetera. So, I think that’s where we are monitoring and watching to see how the overall supply chain even goods that are finished in other countries how the manufacturers are working with all the components of the production line to make sure that we manage to on-time deliveries. That is a fluid situation, one that our teams are all over and managing as best they can in dynamic environment, but overall in terms of the specific China exposure, it’s – I mean it’s we are below 5% now in the spring of the first half of the year in terms of goods sourced from China.

Alright, thank you and best of luck going forward.

Thank you.

Thank you.

Daniel Lupo with Jefferies, your line is open.

Hey, guys. Thanks for taking the call. How much is drawn on the revolver today and do you expect to draw on that at all during the year?

Hi, thanks for the questions. We have zero drawn on the revolver. We have actually never drawn on the revolver. We have no plans to draw on the revolver. As we mentioned in the remarks, we, at the end of the year, made a voluntary prepayments on the term loan for $5 million, which again we are pleased to be able to make that on utilizing the stronger finish to the quarter. And it’s worth noting that while we are still finalizing our term loan certifications at this point we have no reason to believe that we had any issue with the covenant related to the term loan, so nothing drawn on the ABL and progress with respect to the term loan.

That’s good to hear. And then given that you just purchased term, have you thought about buying it back in the open market kind of given the trading levels and have you thought about addressing the ‘22 maturity?

Answer your second question clearly, we are aware of the maturity coming up and as a responsible board and management team are thinking about that. At this point no specific comments on plans around the capital structure other than what we have said in our remarks, which is with excess cash we will continue to address it.

Okay, thank you for your time. Congrats on the quarter.

Thank you.

Thanks.

There are no further questions at this time. I would like to turn the call back over to management for final remarks.

Well, thanks everyone for joining today and we look forward to updating you on our progress on our Q1 call in May. Thank you.

This concludes today’s conference call. We thank you for your participation. You may now disconnect.