J Jill, a retailer of its own brands of women’s apparel, is not sizzling right now. And that, in my experience, is the best time to consider buying a such a stock. But this isn’t a naive buy-any-shunned-stock contrarian play. Instead, think of it as thoughtful contrarianism.
Why this Stock is Being Considered
It’s important, before you start to read about or evaluate a stock, to know why the it came under consideration and be comfortable soundness of those reasons. J Jill (JILL), came to my attention through the micro-nano-cap screen I created on Portfolio123 that looks for very small companies (whose shares have at least a tolerable level of trading liquidity) with fundamentals that, although not necessarily excellent, are sufficient to allow investors to benefit from the positive aspects of micro- nano-cap investing. Details of the approach are described in a 6/18/18 blog post. See also a 6/21/18 follow-up discussing analytic approaches to stocks that are discovered through screens like that.
The screen produced 20 stocks and as I scanned for ideas, JILL did jump up for me as a high-priority choice given its presence in brick-and-mortar retailing and the well-known disasters that have befallen that business (apart from widespread economic challenges that might result from Trump’s trade wars). But I did notice one user advocating for this stock in the comments area, likening J Jill, in one comment, to Chico’s (CHS) back when it was a single-digit micro and before it rose to large-cap status. That got my attention since I found Chico’s in a screen back around 2000 and started recommending it way back then. So I decided to take a look. Besides the Chico’s aura, this kind of stock is generally in my wheelhouse, not that I am a customer of this women’s apparel firm, but in that I spent a lot of time analyzing retail stocks.
My First Impression Remains Valid . . .
I’m still very very concerned about the future of brick-and-mortar retailing. We all know about price competition from on-line merchants including Amazon.com (AMZN), the biggest gorilla here. But I think it’s more than that and will remain so even with state sales tax collections by Amazon. It’s about convenience. It’s about product selection and availability. I’ve given up visiting stores of the store form which I usually by clothing (I suppose a J Jill male alter ego) because I’ve been taught well, by that outfit’s merchandisers, to expect that there will be no inventory in any specific item I want to consider. I’ve learned to just go on-line and if need be, make use of today’s easy return-exchange functionality. I see the empty malls, the empty stores. It’s not a fluke. I’m not the only one.
. . . But The Second Impression Casts J Jill in a More Favorable Light
While I’d hesitate to say any apparel retailer is just like another one, I do recognize similarities to what Chico’s looked like when I first found it. J Jill has a similar target market; college educated women earning about $150,000 who work outside the home and who want to look good but rather than seeking to lead trends, prefer to have a merchant (i.e. J Jill) interpret trends. It’s sexy to think in terms of social media, influencers, what’s trending and so forth. But for investability, fashion forward is not really where I like to be.
It seems as if J Jill recognizes that many in its target market think like I do and are not keen nowadays to visit stores. The company describes itself as “omni-channel” (stores, internet, catalogs) and takes the e-commerce portion very seriously.In the latest fiscal year, stores contributed 57% of company sales, catalogs, 5% and e-commerce, 38%.
