Paula Bennett - President and CEO Dave Biese - EVP, CFO and COO.

Lorraine Hutchinson - Bank of America Randy Konik - Jefferies Paul Trussell - Deutsche Bank Kimberly Greenberger - Morgan Stanley Oliver Chen - Cowen & Company Brian Tunick - Royal Bank of Canada Pamela Quintiliano - SunTrust Robinson Humphrey Ike Boruchow - Wells Fargo.

Good morning. My name is Jack and I’ll be your conference operator today. At this time, I would like to welcome everyone to the J. Jill Fourth Quarter and Full Fiscal Year 2017 Conference Call. On today’s call are Paula Bennett, President and CEO of J. Jill Incorporated; and Dave Biese, Chief Financial Officer and Operating Officer.

All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be 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 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 SECs filing.

The forward-looking statements made today are as of the date of this call and we do not undertake any obligation to update our 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 Paula..

Thank you, and thank you, everyone, for joining us for our year end call. I Before I review our results, I’d like to thank all of our associates for the work that they have contributed over the past year. As I’ve announced my retirement from J. Jill, I’ve had time to reflect on my 10 years with the company.

I’m tremendously proud of the team that we have built over that time and of what we have accomplished together, as well as the consistent, profitable growth we have delivered in the shifting retail landscape.

I’ve worked with Linda over the past year while serving on our Board and I’m confident that her leadership, experience and strength and deep understanding of our industry and customers will allow her to transition very successfully into the CEO role and lead our company forward. Both Linda and I are committed to a smooth and effective transition.

Now, let me review our performance and Dave will follow with further details regarding the fourth quarter financial results, as well as our priorities for 2018. We finished 2017 with some positive trends within our business, but also with certain challenges that our teams are actively addressing.

For the year, we delivered total company comp growth of over 6% and adjusted diluted EPS growth of 13%. We continue to have strong customer loyalty with our customer file growing nearly 7% for the year, ending fiscal 2017 with 1.84 million active customers.

For the fourth quarter, we delivered a positive comp of almost 9%, driven by strong retail performance and actions we took to clear product.

Our retail channel continued to be our stronger performer as our store saw increased traffic and delivered higher conversion and average transaction value, and we look to continue to leverage this important channel.

Within Direct, we were pleased to have completed the rollout of our new e-commerce platform; however our results continued to underperform. We are experiencing a combination of site and product issues that have affected traffic and conversion in the channel and this is having a significant impact on our forecast, which Dave will discuss.

In sum, the business is performing below our standard. Our teams are incorporating recent learnings into our actions and plans for 2018 and are aggressively working on all fronts to reverse our trend.

Before I turn the call over to Dave, I’d like to congratulate him on his recent promotion to Executive Vice President and Chief Financial and Operating Officer. In his new role, Dave assumes the responsibility for strategic planning and business development, while continuing his leadership role within finance, real estate and distribution.

I will now turn the call over to Dave. .

Thank you, Paula and good morning. Let me first speak for everyone at J. Jill to thank you Paula for your leadership and you guidance over the past 10 years. We wish you all the best in retirement and commit to move forward building on the strong foundation we created together. I’ll turn now to our fourth quarter results.

First, our income statement, our total net sales for the 14 weeks ended February 3, 2018 were $188.7 million, compared to $166.9 million for the 13 weeks ended January 28, 2017. On a 13 week basis, total company comparable sales were 8.9% driven by our retail stores and as noted increased promotions to clear inventory.

Gross profit was $117.3 million versus $105.5 million last year, and gross margin was 62.2% compared to last year’s 63.2%. The rate reduction was in line with our expectations and again reflects the actions to move excess and slow selling product. Our reported SG&A expenses were $105.6 million versus $94.6 million last year.

Included in this year’s expense was approximately $2.3 million of non-recurring costs. In the fourth quarter of 2016, we incurred $2.9 million of non-recurring cost.

Excluding the non-recurring expenses from both this years’ and last years’ figures, fourth quarter SG&A as a percentage of total net sales was 54.8% versus 55% for the fourth quarter of 2016. Our GAAP operating income was $11.7 million or 6.2% of sales.

Excluding the non-recurring cost from both periods, operating income was $14 million or 7.4% of sales versus $13.7 million or 8.2% of sales last year. Adjusted EBITDA for the quarter was $24.2 million as compared to $22.5 million last year. As a percentage of sales, adjusted EBITDA was 12.8% versus 13.5% last year.

A reconciliation of adjusted EBITDA to net income is included in our press release. Interest expense for the quarter decreased to $4.7 million from last year’s $5 million, reflecting voluntary term loan reductions totaling $25 million during the year, $5 million of which was in the fourth quarter.

The US tax cuts and jobs act enacted in December 2017 significantly reduced our federal corporate income tax rate and required us to revalue our deferred income tax liabilities using the lower federal rates. This resulted in a one-time benefit of $24 million or $0.55 per diluted share in our fourth quarter.

Excluding this benefit, income tax expense was $1.6 million compared to $3.7 million in the fourth quarter of fiscal 2016. Finally, GAAP net income for the period was $29.3 million or $0.67 per diluted share, versus $2 million or $0.05 per diluted share last year.

Adjusted diluted earnings per share which excludes non-recurring expenses and other one-time items including the impact of tax reform was $0.13 for the quarter compared to last year’s $0.08.

In the quarter and for the year, the 53rd week of business contributed approximately $9.2 million in sales and approximately $0.02 in adjusted earnings per share. For our full year performance highlights, please refer to this morning’s press release.

Turning to our balance sheet; we ended the quarter with $26 million in cash and $38.4 million in availability under our revolving credit facility. Inventory at the end of the quarter was $80.6 million compared to $66.6 million at the end of the fourth quarter 2016.

This is not an apples-to-apples comparison because of the 53rd week in 2017, as we had March inventory receipts in that final week of the fiscal of approximately $8.4 million, whereas March receipt last year were received in the first fiscal week of 2017. During the quarter, we opened two stores and closed one, ending the quarter with 276 stores.

For the year, we opened a total of nine stores and closed 8. Finally, our annual capital spending for 2017 totaled $38 million also in line with our expectations.

Turning to our outlook, as Paula mentioned, our teams are incorporating recent learnings in to our actions and plans for 2018 and we are aggressively working on all fronts to reverse our trends.

As we look back, our business has not recovered from the product and sell-through issues we experienced in the third quarter of last year particularly in our direct channel.

Though product acceptance improved earlier in the fourth quarter, as we had increased global promotions to move our third quarter product, our mix began to be an issue during the peak holiday weeks, as we ended December and operated through January, our inventory levels were simply too high and at that time we were not able to materially adjust our spring inventory commitments.

Therefore inventory levels continued to be an issue. Further as it relates to the direct business, the customer experience on the site is still not where it needs to be.

While we improve technical performance of our new e-commerce site including faster pace load times and clearer messaging at the checkout, we continue to need to improve our engagement with our customer.

This combination of too much of the wrong inventory and the performance of our new website has caused a significant deceleration in our e-commerce business, which is seen in lower traffic and conversion.

Our business thus far in the first quarter of 2018 has also been well under expectation, and we will continue to promote through at least the first half of the year to get inventory in line with demand.

We have been able to reduce our second half purchases with a goal of having a healthier balance of supply and demand and being able to set ourselves up to promote in a more controlled and planful manner.

Also with our new merchandize financial planning system now in place, our teams going forward will have a much clearer view from a planning perspective. With more timely use of inventory ownership in both our markdown and full price product offering, which will improve our pre-season and in-season management of our inventory investment.

Needless to say, improving the direct business is our highest priority. Every area of the business is working to improve results in this channel.

We have dedicated teams working to improve the e-commerce side experience, the productivity of our marketing, our creative and product presentation and to implement customer facing enhancements enabled by our new e-commerce platform.

We remain confident in our new e-commerce site, and the benefits it will deliver to our customers, and we are continuing to diagnose and address the changes we are seeing in consumer behavior that are impacting our direct business.

Given the current trends in the business and the transition in leadership, we are only providing guidance one quarter out until our visibility improves. This will give us the flexibility to fully diagnose trends and make adjustments to the businesses as the year progresses and position ourselves for the healthy recovery.

Given this we do not expect to report year-over-year earnings growth in 2018. With that and for our first quarter, we expect total comparable sales to decline in the mid-single digit range and we continue to see our retail business outperforming our direct business during the period.

With regard to gross margin, given the needed promotion to bring our inventories in line with demand, we expect gross margin for the quarter to decrease approximately 300 basis points compared to the first quarter of 2017. We expect SG&A as a percentage of sales to deleverage slightly. We have reduced spending where we could.

Interest for the quarter will decrease about $200,000 year-over-year given the $25 million in term loan prepayments made in 2017. Diluted earnings per share are expected to be in the range of $0.18 to $0.20 compared to diluted earnings per share of $0.22 and adjusted diluted earnings per share of $0.24 in the first quarter of 2017.

Diluted earnings per share for the first quarter of fiscal 2018 assumes a $0.04 benefit versus the prior year from the US tax cuts and jobs act. This is expected to reduce the company’s effective income tax expense rate to approximately 26%.

Let me also speak to comparisons, fiscal 2017 was a 53 week year as you know and 2018 reverts back to a 52 week year. This creates a timing shift in the first quarter this year for a low volume week in February is replaced with a much higher volume week from May.

We expect this shift to benefit first quarter earnings per share versus last year by approximately $0.03 and this is reflected in our guidance. Our first quarter guidance does not include any expenses associated with the transition in leadership and we are working to determine that amount.

We do expect it will be material and it will one-time in nature. Once again I’ll reiterate that work is underway to aggressively identify and implement actions that will reverse our trends as soon as possible. We will look forward to updating you as we progress and expect to release our first quarter earnings and further outlook in early June.

Now we can take your questions. .

[Operator Instructions] your first question comes from the line of Lorraine Hutchinson with Bank of America. Your line is open..

Moving on Dave I just wanted a little bit more clarity on the issues that you’re having on the e-commerce business. First of all, I thought you were beta testing the new website, so has that gone live throughout the entire reach of the website.

And then secondly it wouldn’t seem that traffic would be an issue if really page load speeds and things like that. So is there something going on with marketing that is not driving the right people to the site at this point. .

On your first point, yes, absolutely we did do beta testing. As we think about that now, and when we talk about it earlier, we were very focused on the page load times and some of the other performance metrics. We absolutely saw an improvement there and that is what brought us to the point where we rolled it out.

As we look at it now, I would say two things, one is, the adoption period is something that we believe is simply taking a little bit longer, just a natural point in terms of changing the experience. Secondly, there are more experiential things that are going on the site that those are our focus now.

And as we’re watching those behaviors and listening to our customer, we in hindsight now I’d say we could have focused more there and that is a big idea for us right now is to be very clearer on the experience she’s having, where are we taking her, how is she navigating through this site and how it is we can continue to improve that aspect of the business.

So on the marketing side of it too, I think I would take that down to a couple of points is, when you look at the unprecedented level of marketing that we had in the fourth quarter and the promotional level that we used, I think it’s fair to say that we were in front of her a lot, and she took advantage of that and she really was able to complete her wardrobe to a large extent.

So as we moved into February, yes, traffic was down as well as conversion. So we do believe there is I’ll call it a little bit of fatigue just in terms of inviting her back in and introducing product in the month of February.

The second thing I would say is simply the fact that yes, as we work through the newness and some of the things we need to do to improve the experience, it’s possible she is not visiting quite as much. So we cited like four different areas where we are really focused in terms of e-commerce experience and we’re working on those.

One of those being the marketing and I would say there are very tactical things like e-mail where we are very focused on right now.

We do see some opportunities to improve our performance just in terms of email, the product presentation in that regard, the messaging that she is getting, and over time as we continue to improve the site and refine that marketing and segment that marketing a little bit better, we believe that traffic is an opportunity along with conversion as we improve the experience.

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Your next question comes from the line of Randy Konik with Jefferies. Your line is open. .

Couple of things, first, Dave you mentioned in the remarks that obviously the balance sheet inventory up 21% is not apples-to-apples. Could you give us a little bit of perspective of what the inventory growth would look like if we thought about shifting it one week further or have you to make it more apples-to-apples.

Just to try to give us some sense on how high the inventories are versus normalized rate at the moment. .

Yes, if we were to exclude those receipts that we noted in our commentary, our inventories would have been roughly 8% up year-over-year on an apples-to-apples basis.

Not outside necessarily where we expected, what I would say is, we had more challenges in the composition of the inventory versus where our expectation was as opposed to the absolute level.

And now when you take into consideration our slow start in February and our receipt level that was planned and bought when we had a different expectation for the business, we are in a situation now where again the composition is off in terms of the age product and the new product is coming in a level that is higher than the demand at the moment, particularly in direct.

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Got it. And then on the mis-match of goods or the mix is a little off. Is there any comments throughout that you’re seeing in terms of trying to assess what’s off about it over the last couple of quarters, just trying to get, in terms of trying to figure out the identification of the issue and so forth. .

I don’t see it as a specific category of business or things that you can put your finger on that precisely in terms of the goods that are more challenging if you will. We talked about a couple of things after the third quarter, but first there were some real wins in our buys, and we hadn’t bought to the level that we could have.

I think that’s important and we talked about the fact that as we moved through the fourth quarter there was improved acceptance of October and November’s deliveries. As you went through December, our business after we talked on December 5 with this group, the business was somewhat softer in December.

And the January goods came in at some point as well. So as we went in to January, we did have some levels of inventory and acceptance of January was not what we had hoped for and that’s when we saw things start to manifest themselves a little bit more as we went through that month. We did turn up our promotion a little bit more as we ended January.

Again it was kind of the combination more so in the aged goods and that is in part what you’re seeing in direct. So in retail you’re able to really guide that service experience. It showcases the full goods or the full priced goods and we are seeing relative strength there. In direct, historically it’s been a strength of our superior goods there.

Right now I would simply say there are just too many of the wrong things. In the direct channel, it’s become a little bit more challenging. The merchandiser is one of the thing that we have to work through it the first half. .

Got it. And then the last question, so on that point on the clearance strategy, you’ve always thought to clear through direct, keeping the stores more right priced if you will. How do you guys think about the clearing strategy altering – being altered if at all, given the inventory.

Do you think, do you need to do some extra clearing through the stores channel? I’m just trying to get a sense of A, how the clearance strategy will change if at all for the next couple of quarters; and B, if the first quarter guidance I believe of down 300 plus gross margin, is that a function of thinking that you can get through most of the issue of the inventory through the first quarter and we could get 75% of it cleared out through the first quarter and less hang over in to second quarter and then be cleaned into the third quarter?.

If I start from the beginning on that I don’t see anything about our current situation that changes the way we approach our flow of good generally. Retail will see some additional promotions along with direct, so we do expect to help move some of those promotional goods through retail. With that said though, I think it’s still the same strategy.

It’s going to be more goods going out through our direct channel. So even though we’re seeing some softness as we begin to promote, we would expect that a good deal of that product is going to go out through our direct channel.

The 300 basis points too I would tell you leaves us room to do some very aggressive promoting, whether it be in direct or frankly to see that a if there are goods that are simply not performing, and aren’t going to perform there’s no reason to keep them in front of the customer and we may simply take things out of stock.

So that is our thinking and that is fully baked into our guidance.

Beyond the first quarter Randy, I really wouldn’t say a whole lot more other than to say that it would our point of view right now that’s going to take us through the first half and at some point in the fall we’re more comfortable with having the right composition and levels of inventory. .

Your next question comes from the line of Oliver Cheng with Cowen & Company. Your line is open. Your next question comes from the line of Paul Trussell with Deutsche Bank. .

So I believe you mentioned that the customer fall grew still I think 7% or so this past year.

Can you just talk to us about what kind of returns you’re getting on the newly acquired customers, are those falling meaningfully short from what you’ve seen in prior years, and/or is a more material shortfall really coming from prior customers reducing their frequency of spend, if you could just elaborate on that please?.

Interpreting that a little bit, I would say that in terms of shortfall in business, I would point to direct a little bit more than retail. It is across new brand customers as well as existing customers.

As far as the economics on customer acquisition, it’s fair to say that the third and fourth quarters would have a little different of a return metric if you will. But overall, we adjust quickly to that and we are still continuing to fire newer brands that continue to be in line with their model.

We adjust the return model in the moment for overseeing the moment to see that in the short term. We’re right in terms of the level of marketing, but I wouldn’t say we had a dramatically different point of view in terms of the acquisition model.

The only other thing I would say too is, coming out of the year we did have nice growth year-over-year and even through the third and fourth quarters in our retention rates. So we feel like our customer is still with us and now it is up to us to make the experience better. .

Got it, that’s helpful. And then obviously you’ve outlined expectations here that you won’ t have earnings growth this year, and certainly that’s understandable given the outlined product and kind of conversion inventory issues.

But circling back to a question kind of asked earlier, at this juncture do you firmly have an expectation to return to positive comps and flattish or so gross margins by the second half, or is it just too early to tell at this point?.

Appreciate the question Paul, but I am going to ask you to wait and we will get further guidance in early June when we have our next call..

Your next question comes from the line of Kimberly Greenberger with Morgan Stanley. Your line is open. .

I’m wondering if you could look at the first quarter comp guidance, this negative mid-single digit and give us any color if you have it on how you think that will break down between stores and e-commerce.

And then secondarily, the challenges that you’re having, is it strictly with the carry-over clearance product or are new spring deliveries also struggling either in the stores channel in the e-commerce channel..

In terms of the mix of the business I won’t be specific on that other than to tell you that our expectation of both businesses would be that they are going to be negative in the first quarter, but direct much more so. .

And I would add in terms of the product Kimberly that there is strong response to significant portions of the new collections as they come in, and it’s certainly showing very nice response in retail. The challenge is in direct that she can see that our sales product is competing with the full price product.

So we’re seeing a better response in retail as Dave mentioned than we are in direct. .

And then Dave I know you’ve said that you’re continuing to diagnose the problems with the website. And I know it’s probably a very complex issue, but can you just give us a sort of list as you know it today of the issues on the website that you’re currently experiencing and then what else you’re working to diagnose. .

Sure. I guess I would go back to the four things that we note in the script. So there is the slide experience itself. I believe again that there is an overall adoption period that is going to run longer than we originally expected. So I think there’s going to be something natural about that in terms of her becoming better acclimate to the site.

We’re not counting on that though, what we are counting on is the thing we can control and I would tell you that there is a number of updates that are scheduled to occur over the next few months, all of them have very specific things that are either our customers have called out for us or we’ve sat down, put ourselves in the room, worked through with experts in terms of where are we heading, challenge is either with where we’re taking her, how it navigates, what she’s seeing in the light, and we have a number of things specifically identified and will work through largely in the spring season.

The productivity of our marketing was the other thing we noted. Again I pointed to e-mail there. We believe there are things that we can do that will improve the performance there.

Things that are simply in terms of the initial communication, what she’s in the email, we’ll look to improve open rates and then when we take her in to the site, where is she landing, what is she seeing and how or when it ties in to the creative and product presentation that I note. It’s really all of those experiences.

Now that’s a little generalized, but I would tell you that’s where our data comes in very handy, and we do have a lot of diagnosis going on in terms of how is she going to the funnel entrance when she lands on the site, how is she behaving when she hits the pages, what is she buying.

So I would say heavy diagnosis in seeing that we have analyzed that all the way through to the purchase to really look for those points of friction and to improve that. The last thing we talked about was the customer facing enhancements. There are a number things there, I’m just going to touch on a few.

We’re going to add pay options to the site at some point this year. There’s going to be different my account features that we believe will improve the experience. There’s going to be some added fit guidance feature later this year.

A lot of those things are things that we see sometime in the fall, but I like it from the stand point of working through these other things I talked about, offering these additional features in the fall and really looking to starting now and we started earlier to be honest, and really working through to the point where we can significantly improve the experience.

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Your next question comes from the line of Oliver Chen with Cowen & Company. Your line is open. .

The details were helpful, but David along the lines of the digital experience which part do you think are the most friction causing in terms of the experience. And related to this, are there other factors at play in terms of customer acquisition, challenges in terms of just digital being a competitive channel across the sector.

And ultimately how should the site be better with the changes in terms of where it’s supposed to go over time and what does it enable? And the second question was just in the customer matching program and the data analytics that you have. Has that helped you help inform a lot of decisions and hypothesis you’re making about what you should do next. .

Well as I work back through that I’ll start with the last one first. I guess in the previous response that was what I was alluding to is, our data capabilities and our analytics capabilities, we still see that as a real advantage, and we are taking full advantage of that now to really understand.

And it’s beyond data and really also in those behaviors on the website and using not just the data but the tools you have to really understand what our customer’s doing at every point in the transaction, and breaking those things down, identifying those points of friction, being very clear on what the in-fix is, scheduling that in terms of an update to the site, scheduling of those updates.

It’s really mechanical from that standpoint in terms of stepping through all of that, using the data and seeing that we’ve identified those points and implementing improvement. I’m really not inclined to tell you what I think that list looks like. I will tell you that it’s fulsome in terms of the opportunity.

So I’ll say that’s a little bit of a bad news, and that’s also the good news. There are clear things that we can identify and have identified that we see that can and will improve the experience.

As far as digital is concerned, I guess what I would confirm is, it’s our belief in the fourth quarter that there were players, big players got bigger and more players came in just in terms of the crowding of the space from a digital standpoint. So I would say that we acknowledge and recognize that.

I can’t tell you if I can translate that in to how does that impact us. But it’s something we’re aware of and obviously we look then to use that as collected body of knowledge to improve our performance going forward. So it’s something I would say particularly around holiday that [further] hindsight that we will build in to our thinking next year. .

Oliver the key point to make is that we are really focusing and working on the things that we can’t control.

There are certainly market forces at play, but we know that we can do a better job in terms of the creative presentation on the site and delivering a better customer experience and that’s what we’re focusing our energy on and a great product experience as well. .

And then lastly, it’s all helpful, on the product innovation side and the creative guide as well in the process, how are you feeling about that engine in terms of where you are with and where you want to be.

It sounds like the tools will enable you to continue to mitigate risk there, just curious about the status of that just to avoid the misses as best way possible going forward. .

So interpreting that, you’re simply asking how it is if there is, what it is around our design process that gives us comfort going forward?.

Yes, that’s great. .

Oliver I would say that our creative team and our design and merchandizing team are still very much in place. They’re all working very clearly towards delivering a great experience for their customer.

There is absolutely no change in strategy from a design or a creative or a merchandising perspective, other than to continue to do a better job and to learn what we can from what is happening on the side now and to prove that experience. .

And the reinforcement we said historically, at the moment, because of the way we’ve accumulated some goods, we are over sorted particularly in direct, particularly in age product. So one of the things in the first half it’s an absolute inventory level, but it is also to get our assortment back to a certain point.

And that also would likely mean in that the full price offer too we have chances to edit the assortment and then improve it. All of that again is geared towards the fall, so inventory is a composition and assortment opportunity as well as an overall level. .

Your next question comes from the line of Brian Tunick with the Royal Bank of Canada. Your line is open. .

My real question is to trying and understand the de-sale at the store level really trying to understand. So it sounds like comps at the store over the fourth quarter must have been double-digits, and now you’re guiding them for negative.

So just trying to understand whether it’s a direct de-sale that’s impacting this, just may be walk us through what’s happening to the retail side.

And then maybe Dave on the comments that the year earnings won’t be up on the 26% tax rate now, just curious if you are or were planning to take any of those tax savings and reinvesting them in any parts of the business on top of the turnaround initiatives that you’re talking about today.

So just curious if you were doing anything with your tax savings. And then the third question is just your lead times.

I think Oliver just asked about some of the guard rails, just can you remind us sort of what’s going on from a lead time perspective?.

Well on the lead times I don’t think there’s really anything to mention. Nothing stands out in terms of anything that’s changed or how we think about it differently. Like many retailers, we’re always working to improve it and see what we can do to improve our response time and like, but nothing out of the ordinary course.

So, we feel like we have the right development cadence and the like, we’ve gotten ourselves a little bit behind right now, we’re going to catch that up and we’re going to continue to focus on getting ourselves in a much better position by the fall.

I’m going backwards now, as far as taxes are concerned, there’s nothing for me to share at this point around our investment beyond the first quarter. So stay tuned on that, but I would say as a general idea we don’t have – there’s not a thought process around taking savings from taxes and reinvesting them in a particular way.

I think our priorities are what they are, because of where we are in the business as opposed to how to invest those savings. But it is a meaningful savings for us, it is a nice benefit and we’ll look to be smart about going forward. In retail, retail also in the fourth quarter benefited from our promotional schedule, but less so.

There was a better mix of business in terms of the full price and the off priced goods, and we really saw a nice benefit in both traffic and conversion in the quarter. I think there’s also a little bit there in terms of the idea of as promotional as we were. Our customer is smart, she took advantage of that and she really filled out her wardrobe.

So February is not a big idea in terms of the overall business, but we have seen traffic drop off not so much conversion. So on a relative basis it is stronger. I will change my answer a little bit on retail.

We could be more like a flat in retail to a slight negative, but I’ll be official now and I’ll say that business is probably going to be more like a flat sort of answer, whereas the negative mid-single is going to be driven much more so like direct. .

Your next question comes from the line of Pamela Quintiliano from SunTrust. Your line is open. .

I just had two question, the first was, can you remind us of the profile of your customer whose shopping online versus in store, and the metrics on the customer as you’re cross shopping and the spending patterns there.

And then the second question is just regarding the store growth plans for the year, what those are and are you shifting anything there due to the recent challenges. .

So as far as store growth is concerned, in our guidance, we [indiscernible] 10 to 12, and so for new stores we’re looking for growth in the range of 10 to 12 new stores, and we cited that we expected to close around eight stores in the coming year. Sorry, so there you go, there’s your guidance for next year, I’m sorry.

So that’s where we are at for new store. I apologies for some reason I thought I’d covered that. But for next year we look for growth of new stores at 10 to 12 locations. We expect to close off like seven or eight locations in the next period. .

Is that any change from where you have been reflecting the recently challenges you’ve had or is that been consistent?.

What we’re talking about now really has an influence at necessarily. I would say that’s been our idea for some time. As far as the profile of the customers and the channel, I wouldn’t note anything materially different in terms of the profile. The metrics that we’ve talked about in the past though is about 22% of our customers shop in both channels.

Historically that means that spends at about three times, a 3x type of multiple versus a single channel customer. There was relative strength in our file and as we ended the year in terms of those customers that shop both there was relative strength in the file and retail.

There were some positive highlight in direct, but for the most part I guess what I do is go back to my comments earlier that in the direct channel it was not just new to brand, it was the existing customer as well, and that’s where we saw some I’ll say real weakness. .

And I know you had mentioned marketing, but how do you keep her, because you have such a loyal customer and recently with some of the disappointments that have occurred online, when you think about the outreach either the timing of marketing and if you’re speaking to her more often or just anything you could provide on how you maybe messaging differently would be appreciative.

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Well I think for the next six months I don’t believe there’s an opportunity to do – we’re always working to improve messaging, let me start there. We use the data to really try to refine the mix of marketing. I touched on email and I think we’re going to do a better job there.

There are some specific things in terms of initiatives around our brand message and also been able to segment the file that are also directed more towards the fall of this year, at least in terms of beginning those activities and then looking for a longer term for them to really take hold. So I’d see those as some bigger ideas.

We’re going to look to improve as soon as we can, but as far as the overall message for the next six months, again because where we are at inventory, I would expect that for the most part the frequency of the messages and a fair amount of those messages are going to be more promotional. .

Your next question comes from the line of Ike Boruchow with Wells Fargo. Your line is open. .

Dave I don’t know if you gave it. Sorry if it missed it.

Can you give a CapEx number for the year and then can you just confirm or deny Brian’s comment about the store comp in the double digit rate, and just trying to get on the 53rd week, kind of throws it off a little bit for us on the back end though it is kind of curious if you comment on the store comp performance in Q4. .

Yes, I will confirm for the fourth quarter that it was a double digit comp in retail. .

Got it. And the CapEx number yet. .

I’ll comment, just to remind you that comp percent was a 13 week comp calculation as opposed to 14 week, where as our results are based on a 14 week. And your other question I believe was about CapEx. We will provide guidance on that at a later date. .

This concludes the Q&A portion of our call. I would now like to turn the call back over to Paula for closing remarks. .

Thank you. And before we close, I’d like to thank all of you for your support over the past year as we transition to a public company. And while we are aggressively taking action to improve our current trends, our commitment to our customer remains stronger than ever, and I could not be more confident in the future of J. Jill.

With our loyal customer base, our strong omni-channel foundation, our disciplined approach to using data effectively and our talented team, J. Jill is well positioned to regain momentum overtime. And I look forward to working with Linda over the coming weeks to ensure a smooth transition.

And I’ll be carrying the team as they work to realize the power and the potential of our J. Jill brand and business. Thank you..

This concludes today’s conference. You may now disconnect..