The J. Jill Group, Inc. History

Company Perspectives:

J. Jill's mission is to provide you with the simplicity, comfort and satisfaction that comes with clothes you can live in and service you can trust.

Company History:

The J. Jill Group, Inc. is an upscale specialty marketer of women's apparel, accessories, and gifts under the J. Jill brand, using multiple distribution channels to market its wares, such as catalogs, retail stores (including its own stores), and its Web site. J. Jill's apparel is almost entirely private label under its own name, with emphasis on natural fibers and unique details. Its target customers are active, affluent women aged 35 to 55.

Selling by Catalog Only: 1987-95

DM Management Co. was founded with venture capital funds in 1987 to build a business by purchasing undervalued and poorly performing catalogs. Carl Lipsky, who founded J. Jill in 1959 (naming it for his wife, Jennifer, and daughter, Jill) sold the company in 1988 to DM Management, which, as its initials implied, was engaged in direct-mail marketing. The company fared poorly in its initial years. In fiscal 1990 (the year ended June 30, 1990), for example, it lost $9.63 million on sales of $23.88 million. Over the next two years, however, DM Management's sales continued to climb and its losses decreased. In fiscal 1993, the company earned $1.55 million on net sales of $47.51 million.

By mid-1993 there were three DM Management apparel catalogs: J. Jill Ltd., The Very Thing!, and Nicole Summers. The first was described by the company as featuring 'comfortable and easy-to-wear clothing,' the second as 'refined apparel for women with discerning tastes,' and the third as for 'women whose style is distinct but eclectic.' Typically, they were mingled and mailed together, with a unique offer of free overnight shipping and handling with a minimum order of $50 and the slogan, 'Call us today, wear it tomorrow.' DM Management went public in 1993, offering stock at $9 a share. In fiscal 1994 the company enjoyed its best year to date, earning $3.27 million in net income on net sales of $63.34 million.

DM Management added N.S. Memorandum, a specialty Nicole Summers career dress spin-off, in 1993, and Gateway, a specialty resort and vacation wear book of fashions from The Very Thing!, in November 1994. A month later it acquired the trademark, customer list, and certain other assets of Carroll Reed, Inc., a specialty retailer and cataloger of classic women's apparel, for $6.21 million. DM Management described the Carroll Reed catalog as featuring 'enduring styles with impeccable tailoring and superior value.' By mid-1995 the company had added a third specialty catalog, Our Favorites, which featured the most popular items from each of the principal catalogs. Circulation of all DM catalogs came to 44.2 million in fiscal 1995, with Nicole Summers leading The Very Thing! and J. Jill, Ltd. (As a recent acquisition, Carroll Reed was not included in this tabulation.)

DM Management was leasing corporate headquarters and production facilities in Hingham, Massachusetts. It owned a distribution center in Meredith, New Hampshire and had three outlet stores--two in New Hampshire and one in Bedford, Massachusetts. DM was offering both brand-name and private-label dresses, suits, sportswear, swimwear, loungewear, coats, jackets, shoes, and accessories, purchasing merchandise from about 450 different vendors.

Focus on J. Jill: 1996-98

DM Management had disappointing net income of $773,000 on net sales of $72.69 million in fiscal 1995. With the stock slumping--it fell below $2 a share late in the calendar year--Gordon R. Cooke was appointed to replace Samuel L. Shanaman as president and chief executive of the company. Cooke, former president of Time Warner Interactive Merchandising, had previously helped start an around-the-clock home-shopping show and presided over Bloomingdale's mail-order operations. Interviewed in 1998 for Forbes by Peter Kafka, Cooke recalled, 'Every skirt we sold was down to the ankles. All our models had little plastic flowers on their dresses, and it drove me crazy. I said, `Who are we targeting, the 80- to 100-year-old woman?' Under his direction, DM Management began appealing to how its mature customers wanted to see themselves rather than as they were, using catalog photos and illustrations to evoke youth and fashion.

To save printing and paper costs, DM Management combined the Nicole Summers and The Very Thing! catalogs in March 1996. The overwhelming majority of the company's customers--chiefly career women between the ages of 45 and 65--were not only receiving both books but often getting several copies of the same catalog. Two months later, the company dropped Carroll Reed because of disappointing sales and the difficulty of integrating its customer list with DM's other catalogs. The company made a small profit in fiscal 1996, excluding a $9.6 million charge for the costs of discontinuing this book.

The transformation of DM Management left the company with two core books: Nicole Summers and J. Jill, which was now targeting a customer about a decade younger and more oriented toward casual clothing than the more corporate, career-minded Nicole Summers buyer. J. Jill began offering more exclusive, private-label merchandise under the J. Jill label, a broader range of sizes, and 'total look' ensembles that combined apparel, accessories, shoes, and gifts on a single page. Nearly two-thirds of J. Jill catalogs began to go to new customers.

For the 1996 holiday season, DM increased the proportion of new merchandise offerings to 60 percent, compared with only 15 percent in prior years, when the company was essentially promoting goods the customer had already been offered earlier in the year. DM also added product categories to its holiday catalogs, including accessories, gifts, and home furnishings. Nicole Summers offered Elizabeth Arden cosmetics for the first time and introduced crystal from Baccarat and Waterford. Changing to a calendar-year (except for the week after Christmas) annual accounting, DM posted net income of $3.37 million for 1996--excluding the Carroll Reed charge but including a $1.6 million income tax benefit--on net sales of $84.64 million.

DM's marketing changes were inspired by Cooke's use of database management to learn more not only about the company's own customers but also the buying patterns of other mail-order buyers. The company purchased two million names in 1997 and mailed half of all copies of J. Jill catalogs to prospective, rather than previous, customers. Rather than rely on scattershot techniques or only on its own internal resources, DM was (in 1998) acquiring lists of prospects in part from Abacus, a database cooperative that was pooling information from more than 1,000 catalogers to identify the most active mail-order buyers.

Business was so good in 1997 that, to fulfill its orders, DM Management had to rent 150,000 square feet of space in Meredith to supplement the activities at its own 93,120-square-foot warehouse, plus additional rented quarters in nearby Laconia. The company, in January 1998, began construction of a 400,000-square-foot operations facility in Tilton, New Hampshire. Sales soared to $135.53 million in 1997, and net income rose to $3.9 million. DM raised $17.45 million that year by issuing an additional 1.41 million shares of stock to the public at $13.50 a share. The company enjoyed an even better year in 1998, earning $8.4 million on sales of $218.73 million.

DM Management entered the home furnishings market by adding a 24-page section of sheets, towels, and other domestic goods to its October 1998 issue of J. Jill. This was followed in March 1999 by a freestanding 48-page home catalog entitled Peopleplacesthings, sent to one million prospective customers and stressing 'natural fibers, casual comfort, easy care and lots of spirit,' according to Patricia Lee, president of merchandising. Peopleplacesthings items featured a muted color palette, with neutral, washed-out hues. The publication was shelved in mid-1999, when DM decided to concentrate instead on building retail and online ventures.

DM Management continued to lavish attention on the J. Jill catalog. In the April 1999 issue of Catalog Age, Lois Boyle wrote, 'J. Jill hires many of the same beautiful models with streamlined bodies who appear in other books, but it photographs them with a keen difference. The poses and clothes styling reflect a lifestyle--not just clothes on a model. In a look you might call `sloppy chic,' many J. Jill photos reflect clothes that are comfortably suited to a woman involved in everyday activities.' In a later 1999 Catalog Age issue, a J. Jill 1998 holiday catalog cover of a 'naked' mannequin adorned with Christmas lights was cited as among the ten best catalog covers of the year.

Launching Retail Stores and E-Commerce in 1999

DM Management was renamed The J. Jill Group, Inc. in June 1999. This action was accompanied by a corporate decision to expand its sales through retail and e-commerce operations as well as mail order. The company announced plans to open ten J. Jill stores in 2000 and up to 50 stores by the end of 2001. These outlets would, ideally, be located in upscale malls and close to chain stores such as Crate & Barrel, Banana Republic, Bloomingdale's, J. Crew, Lord & Taylor, Nordstrom, Restoration Hardware, Saks Fifth Avenue, and Talbot's. They would carry about half the stockkeeping units in the J. Jill catalog and would merchandise apparel, accessories, shoes, and gifts in a 'lifestyle presentation.' Many of the chairs, armoires, and lighting displaying the goods would also be for sale. 'We believe retail will eventually represent three to four times our catalog business,' Cooke told Shannon Oberndorf of Catalog Age.

1988:Recently founded DM Management purchases J. Jill.

1993:DM Management becomes a public company.

1994:Company buys Carroll Reed, its fourth regular catalog.

1996:DM Management drops two of its four catalogs.

1998:DM constructs a new warehouse in Tilton, New Hampshire.

1999:Company changes its name to J. Jill, opens its first retail stores, and drops its Nicole catalog.

The first two new J. Jill stores, opened in August 1999, were 5,000-square-foot units in Natick, Massachusetts and Providence, Rhode Island. An interactive Web site, linked to the company's order-taking infrastructure and fulfillment operations, made its debut in August 1999. J. Jill Group moved its headquarters from Hingham to Quincy, Massachusetts before year's end.

The Nicole Summers catalog was renamed Nicole in June 1999, with plans announced to feature loose, less-tailored clothing than in the past. The first issue appeared in August but apparently fared poorly. In September J. Jill Group announced that it would lose money during the third quarter of the year and would discontinue Nicole. The company posted another loss for the last three months of 1999 and registered a deficit of $6.84 million (including charges of about $6 million for discontinuing Nicole) on sales of $250.28 million. Company shares of stock, trading as high as $26.50 in May 1999, closed the year at only slightly more than $3. 'J. Jill had a wonderful run,' an analyst told Philana Patterson of the Wall Street Journal in October, adding 'They hit a chord--and they created competition. Talbot's, Coldwater Creek and Lands' End began to ... put more of that type of merchandise in the marketplace.'

Of The J. Jill Group's 1999 net sales, J. Jill merchandise accounted for about 87 percent. Almost all of its offerings were private-label merchandise sold under the J. Jill name. Many of these offerings were being designed by the company itself and were not available in other catalogs or retail stores. Regular sizes ranged from 4 to 20, with a broad assortment of apparel also available in the same styles in petite, tall, and large sizes. Extended size offerings accounted for 47 percent of total J. Jill apparel offerings in 1999. About 32 percent of the company's merchandise came from foreign suppliers or buyers, mainly in Hong Kong, Singapore, and Israel. In all, the company purchased goods from about 630 vendors during the year.

J. Jill Group's catalog circulation reached 94 million, and the number of its catalog customers, 1.21 million, in 1999. The J. Jill customer database contained about 2.6 million names at the end of the year, including about one million individuals who had made a purchase from the J. Jill catalog during the previous 12 months. Fulfillment of orders usually took three to five business days. Of J. Jill's five stores in operation at the end of the year, three were outlet stores run solely for the purpose of liquidating overstocks.

Principal Subsidiaries: Birch Pond Realty Corporation.

Principal Competitors: Bloomingdale's By Mail Ltd.; Brylane LP;

Coldwater Creek Inc.; Lands' End Inc.; Patagonia Inc.

Further Reading:

• Boyle, Lois, 'Breaking Away from the Pack,' Catalog Age, April 1999, pp. 87-88.
• Brownlee, Lisa, 'Catalog Retailer's Turnaround Goes by the Book, Trumps Stores,' Wall Street Journal, October 28, 1997, p. B6.
• Del Franco, Mark, 'J. Jill Home Book Held,' Catalog Age, July 1999, p. 5.
• Dowling, Melissa, 'Scrambling for Extra Space,' Catalog Age, March 1998, p. 51.
• Hochwald, Lambeth, 'New Look, Better Numbers,' American Demographics, October 1998, pp. 42-45.
• Kafka, Peter, 'J. Jill's Rejuvenation,' Forbes, May 4, 1998, pp. 70, 74.
• Kiley, Kathleen, 'Resortwear Book Sets Sail,' Catalog Age, February 1995, p. 24.
• Merritt, Jennifer, 'Catalog Company Orders Up a Turnaround,' Boston Business Journal, July 31, 1998, p. 1 and continuation.
• Miller, Paul, 'J. Jill Joins Crowded Home Market,' Catalog Age, June 1998, p. 22.
• Moin, David, 'J. Jill Pushes Up Launch Date for Retail Chain Prototypes,' WWD/Women's Wear Daily, August 31, 1999, p. 11.
• Norris, Floyd, 'No News Turns into Bad News at Retailer,' New York Times, September 21, 1999, pp. C1, C11.
• Oberndorf, Shannon, 'New and Improved,' Catalog Age, January 1997, pp. 5, 26.
• Patterson, Philana, 'Catalog Retailers Are Likely To Post Mixed Results as Competition Increases,' Wall Street Journal, October 18, 1999, p. A43G.
• Reidy, Chris, 'DM Management Bucks Woes Facing Other Catalog Retailers,' Boston Globe, January 7, 1998, p. C5.
• Schmiel, Jack, 'Stand-Out Offers,' Catalog Age, July 1993, p. 142.
• Sloan, Carole, 'J. Jill Is Home at Last,' Home Textile News, April 5, 1999, p. 8.

Source: International Directory of Company Histories, Vol. 35. St. James Press, 2001.

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