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Here's Why J. Jill (JILL) Stock Tanked Today

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On Tuesday, shares of women’s apparel retailer J. Jill Inc. (JILL - Free Report) are tanking, down over 15% in afternoon trading on the heels of the company’s latest quarterly earnings report.

J. Jill reported earnings of 29 cents per share, matching the Zacks Consensus Estimate. Total net sales topped our consensus estimate, coming in at $181.4 million and increasing 9.9% year-over-year; direct-to-consumer net sales, which is a reflection of J. Jill’s e-commerce growth, represented 43.1% of total net sales. Comparable store sales increased too, growing 7.8%.

"We are pleased to deliver another quarter of strong sales and earnings growth," said President and CEO Paula Bennett in the press release. "Our second quarter performance demonstrated the continued strength of our omnichannel model and the disciplined, data-driven approach we take to our business.”

“As we enter the back half of the year, we remain focused on delighting our customer with the product assortment and shopping experience she values while continuing to deliver consistent profitable growth,” Bennett continued.

J. Jill’s guidance, however, was softer than what investors had been expecting, and the main reason for today’s stock price decline. The company expects total comparable sales to increase in the high single digits for the third quarter of fiscal 2017, but it’s only projecting adjusted earnings in the range of 18 cents to 20 cents per share. Analysts are expecting earnings in the high end of that guidance.

Known for its popular catalog, J. Jill is a retailer that caters to women between the ages of 40 and 65, with product that is both trendy and relaxed. It has a unique business model: over 40% of its total revenues before the company went public came from sales driven by its catalog and website, and its strong direct-to-consumer model has helped foster a loyal customer base.

With a P/E of 13.65, J. Jill is more expensive than its broader industry, Retail-Apparel Shoes, which sits in the bottom 38% of all industries ranked on the Zacks Industry Rank. While its valuation has declined since its IPO, J. Jill is likely considered to be more valuable among investors and consumers than other retailers based on both the product it sells and how it sells its product.

While J. Jill stores are located in malls, J. Jill is not your average mall retailer, and investors are probably willing to pay a little bit more for a company that already has a strong footing in e-commerce and customer loyalty.

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