J.Jill has been ranked among the “most vulnerable” publicly traded retailers in America.
According to the S&P Global Market Intelligence, the womenswear chain has a 16.8% probability of default over the next 12 months. Fashion retailers Destination XL and Christopher & Banks also made the S&P’s list, which took into account each companies’ one-year and two-year probability of default on loans, or the likelihood that they would not be able to make their scheduled repayments on time.
What’s more, the agency’s data showed that retail bankruptcies have already hit 44 so far this year. That’s just one Chapter 11 filing short of 2011 and three less than 2010, based on the company’s S&P follows.
The fashion and footwear sectors have been hit particularly hard as the coronavirus pandemic forced widespread store closures and subsequently halted foot traffic, ultimately denting companies’ top lines and leading analysts to issue low forecasts for the current earnings quarter. Among the most high-profile names that sought bankruptcy protection this year were J. Crew, Neiman Marcus, JCPenney and Lord & Taylor.
J.Jill, on the other hand, might be inching toward a Chapter 11 filing: Over the past several months, the chain has been teetering on the brink of insolvency as its forbearance period has been extended multiple times by lenders. The company revealed that it was exploring various financial options due to cash flow challenges that have worsened amid the COVID-19 outbreak.
What’s more, the company indicated in a few Securities and Exchange Commission filings that it faced “substantial doubt” about its ability to continue as a going concern. To reduce expenses, it has drawn down $33 million under its revolving credit facility, as well as furloughed store associates, reduced the base salaries of its executive officers and foregone its board of directors’ fees.
In late July, as part of its first-quarter report, J.Jill revealed plans to permanently shutter 11 locations this year — most of which are expected to close in the second quarter — for a total of 275 remaining stores by the end of fiscal 2020. At the time, it reported a net loss of $70.3 million versus the prior year’s income of $4.4 million and had roughly $54.8 million in cash.