On September 9, J.Jill (NYSE:JILL) told investors its slow-building turnaround just took a real step forward, with results that beat the company’s own guidance for the quarter. Net sales rose 0.5% to $154.8 million, adjusted EBITDA climbed from $25.6 million to $32.8 million, and adjusted earnings per diluted share jumped to $1.24 from $0.81 a year earlier. But a meaningful share of that improvement traces back to a one-time $13.3 million tariff refund rather than a structurally healthier business, and that gap is the thread running through everything else in the quarter.
New Customers Are Showing Up
The most encouraging thread in the quarter had nothing to do with the tariff refund. CEO Mary Ellen Coyne said the total customer file is stabilizing after a rough stretch, with new-to-brand acquisition accelerating and the incoming customer skewing slightly younger than J.Jill’s traditional base. Those new shoppers are also spending more per visit, driven by higher average order value and more frequent trips, which is exactly the combination management says it has been chasing. Full-price sales improved meaningfully across both stores and digital compared to the first quarter, and direct sales grew 1.9% to $73 million, or 47.1% of total revenue.
The marketing engine backing that shift is gaining traction too. SMS subscriber growth is scaling, loyalty members are retaining at meaningfully higher rates than non-members, and the recent denim relaunch generated nearly 1 million impressions in its first three days. Inventory discipline is also paying off, down 5% year over year, and the store fleet grew to 255 locations from 247. On the back of that momentum, J.Jill raised its full-year sales guidance to flat-to-2% growth and its Q3 comparable sales outlook to 1% to 3% growth.
Strip Away The Refund’s Glow
The headline numbers lean heavily on a refund that will not repeat. Reported gross margin jumped 840 basis points to 76.8%, but excluding the $13.3 million tariff refund, adjusted gross margin was flat at 68.3% versus a year ago, meaning the core margin structure did not actually improve. Underlying adjusted EBITDA, stripped of the refund and $600,000 in strategic spending and elevated shipping costs, was $20.1 million, well below the $32.8 million headline figure. Some of that refund is already getting eaten by rising costs elsewhere.
CFO Mark Webb said about $600,000 of it went toward “emerging cost pressures from fuel surcharges on shipping.” SG&A rose to $94.6 million from $88.6 million on new store costs, higher occupancy from lease renewals, and marketing spend. Store sales alone actually fell 0.7% year over year, meaning digital carried the quarter. Landlord delivery delays are also pushing two planned store openings into early 2027, cutting full-year net new store guidance to just one to three locations, and management still expects second-half tariff rates of 10% to 12.5% on goods landed under evolving trade rules.
Wall Street Isn’t Fully Convinced
Hedge fund ownership of J.Jill fell from 12 funds to 8 between the two most recent quarters, a pullback that runs counter to the improving sales trend management just reported. Short interest sits at 11.62% of float, a level that reflects real, organized skepticism rather than routine hedging. That combination suggests that the market is treating this quarter’s beat with caution rather than conviction. It also means any further upside surprise could squeeze a fairly crowded short base.
The Real Test Comes Next
J.Jill’s second quarter shows real, tangible progress on the customer side: new shoppers are arriving, spending more, and skewing younger, and management is redirecting refund dollars into marketing and technology rather than banking it. But the profitability story still depends on a payment that will not show up again, and the underlying $20.1 million EBITDA figure is a more honest read of where the business actually stands. For the recovery to hold, full-price selling and adjusted gross margin need to improve without a refund propping them up.
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