J.Jill, Inc.

1. General

J.Jillis a national lifestyle brand that provides apparel, footwear and accessories designed to help its customers move through a full life with ease. The brand represents an easy, thoughtful and inspired style that celebrates the totality of all women and designs its products with its core brand ethos in mind: keep it simple and make it matter. J.Jill offers a high touch customer experience through over 250 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston.

J.Jill, Inc. is a holding company. Jill Acquisition LLC, its wholly-owned subsidiary, and J.Jill Gift Card Solutions, Inc., a wholly-owned subsidiary of Jill Acquisition LLC, are the operating companies for the business assets.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The Company’s fiscal year ends on the Saturday, in January or February, nearest the last day of January, resulting in an additional week of results every five or six years. Fiscal Years 2024 and 2022 contained 52-weeks of operations whereas the Fiscal Year 2023 contained 53-weeks of operations.

Financial Statement Presentation

Certain reclassifications have been made to prior periods to conform with the current period presentation.

On the consolidated statements of operations and comprehensive income, the Company reclassified amounts for interest income for fiscal years ended February 3, 2024 and January 28, 2023 from Interest expense, net to a separate financial statement line item to conform with the current presentation for the fiscal year ended February 1, 2025.

On the consolidated statement of cash flows, the Company reclassified approximately $2.5 million of prepaid software project costs from Prepaid expenses and other current assets to Other assets for the Fiscal Year ended February 3, 2024. For further details refer to the “Cloud-Based Software Arrangements” section below. In addition, the Company presented restricted cash of $0.4 million for fiscal years ended February 3, 2024 and January 28, 2023 as a separate item in the consolidated statement of cash flows to conform with the current presentation for the fiscal year ended February 1, 2025.

Correction of Immaterial Error

Prior to Fiscal Year 2024, the Company had recorded processing fee income related to customer sales returns as a contra expense within Selling, general and administrative expenses rather than as a component of Net sales in the consolidated statements of operations and comprehensive income. Beginning in Fiscal Year 2024, the Company recorded this revenue as a component of Net sales within the Direct channel. The Company reclassified this income, which increased previously reported Net sales and Selling, general and administrative expenses by approximately $3.4 million and $3.3 million for Fiscal Years ended February 3, 2024 and January 28, 2023, respectively. The Company has concluded that the reclassification of this income was immaterial to the prior period financial statements.

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect reported amounts of assets, liabilities, shareholders’ equity, net sales and expenses, and the disclosure of contingent assets and liabilities. Significant estimates relied upon in preparing these consolidated financial statements include, but are not limited to, revenue recognition, including accounting for outstanding gift cards that will ultimately not be redeemed (“gift card breakage”) and estimated merchandise returns; estimating self-insurance reserves; estimating the value of inventory; impairment assessments for goodwill and other indefinite-lived intangible assets, and long-lived assets; discount rates used in the measurement of right-of-use assets and operating lease liabilities; and estimating equity-based compensation expense. Actual results could differ from those estimates, and such differences could be material.

Principles of Consolidation

The accompanying consolidated financial statements include the assets, liabilities and results of operations of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in thousands):

Segment Reporting

The Company determined its operating segments on the same basis that it assesses performance and makes operating decisions. The Company’s operating segments consist of its Retail and Direct channels, which have been aggregated intoone reportable segment.

All of the Company’s identifiable assets are located in the United States, which is where the Company is domiciled. The Company has immaterial sales outside the United States. No customer represents more than 10% of total revenues for any period presented.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting, Improvements to Reportable Segment Disclosures”. For the Fiscal Year ended February 3, 2025, the Company adopted ASU 2023-07, refer to Note 3. Accounting Standards and Note 12. Segment Reporting for additional details.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits and all highly liquid investments with original maturities at the time of purchase of three months or less. Certain cash account balances exceed FDIC insured limits of $250,000 per account and, as a result, there is a concentration of credit risk related to amounts in excess of insurance limits. We monitor the financial stability of these financial institutions and believe that we are not exposed to any significant credit risk in cash.

Restricted Cash

The Company's restricted cash balance represents an imprest cash account used for the funding of employee healthcare costs. The balance of restricted cash as of February 1, 2025, February 3, 2024 and January 28, 2023 was $0.4 million, which is included in Prepaid expenses and other current assets on the consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows:

Accounts Receivable

The beginning balances at January 28, 2023 for accounts receivable arising from contracts with customers was $7.0 million with ending balances included in "Receivables, net" in the Consolidated Balance Sheets.

The Company’s accounts receivable relates primarily to payments due from banks for credit and debit card transactions for approximately 2 to 5 days of sales. These receivables do not bear interest. The Company occasionally sells inventory to liquidators, and if these sales occur near the end of a reporting period, they are also included in accounts receivable.

Inventories

Inventory consists of finished goods held for sale. Inventory is stated at the lower of cost or net realizable value. Cost is calculated using the weighted average method of accounting, and includes the cost to purchase merchandise from the Company’s manufacturers plus duties, tariffs, inbound freight and commissions. The net realizable value of the Company’s inventory is estimated based on historical experience, current and forecasted demand, and market conditions. The allowance for excess and obsolete inventory requires management to make assumptions and to apply judgment regarding a number of factors, including estimates applying past and projected sales performance to current inventory levels. As of February 1, 2025 and February 3, 2024, an inventory reserve of $1.1 million and $0.8 million has been recorded, respectively. The Company sells excess inventory in its stores, on-line at www.jjill.com and occasionally to inventory liquidators.

Inventory from domestic suppliers is recorded when it is received at the distribution center. Inventory from foreign suppliers is recorded when goods are cleared for export on board the ship at the port of shipment.

Property and Equipment

Property and equipment purchases are recorded at cost. Property and equipment is presented net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the shorter of the term of the related lease or the estimated useful lives of the improvements. The Company capitalizes as property and equipment certain qualified costs incurred in connection with the development of internal-use software. Capitalization of internal-use software begins during the application development stage and ends when the software is available for its intended use. Capitalized internal-use software is amortized on a straight-line basis over the estimated useful life of the software. Expenditures for repairs and maintenance are charged to expense as incurred. Expenditures for betterments and major improvements that significantly enhance the value and increase the estimated useful life of the asset are capitalized and depreciated over the new estimated useful life. The carrying amounts of assets sold or retired and the related accumulated depreciation are eliminated in the year of disposal, and any resulting gains or losses are included in the consolidated statements of operations and comprehensive income. See Note 7. Property and Equipment for additional information.

Estimated useful lives of property and equipment asset categories are as follows:

Capitalized Interest

The cost of interest that is incurred in connection with long-term leasehold improvements and software related projects is capitalized using a weighted average interest rate. These costs are included in property and equipment and amortized over the useful life of the related property or equipment.

Long-lived Assets

The carrying value of long-lived assets, including amortizable identifiable intangible assets, and asset groups are evaluated whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Conditions that may indicate impairment include, but are not limited to, a significant decrease in the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used or a significant decrease in its physical condition, and operating performance that demonstrates continuing cash flow losses associated with an asset or asset group. A potential impairment has occurred if the projected future undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group are less than the carrying value of the asset or asset group. The estimate of cash flows includes management’s assumptions of cash inflows and outflows directly resulting from the use of the asset in operation. If the carrying value exceeds the sum of the undiscounted cash flows, an impairment charge is recorded equal to the excess of the asset or asset group’s carrying value over its fair value. Fair value is measured based on a projected discounted cash flow model using a discount rate the Company believes is commensurate with the market participant rate. Any impairment charge would be recognized within operating expenses.

Goodwill and Indefinite-lived Intangible Assets

Goodwill represents the excess of the purchase price over the fair values of the assets acquired and liabilities assumed in conjunction with an acquisition. Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment at least annually or more frequently between annual tests when events or changes in circumstances indicate that the carrying value may not be recoverable.

In Fiscal Year 2024, we continue to evaluate goodwill for impairment on an annual basis, using the last day of our eleventh fiscal month as the test date, rather than the end of our fiscal year. This change in the impairment test date, implemented in Fiscal Year 2023, reduces resource constraints related to the Company’s year-end close and financial reporting process and provides additional time for completing impairment testing. It also aligns with the Company’s long-range planning and forecasting processes. This change does not represent a material change to the Company’s method of applying an accounting principle, and therefore does not delay, accelerate, or avoid an impairment charge. Judgments regarding indicators of potential impairment are based on market conditions and operational performance of the business.

The Company’s policy is to perform a quantitative analysis every three years. During those years when a quantitative assessment is not performed initially, the Company may assess these assets for impairment using a qualitative approach to determine whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If management concludes, based on its assessment of relevant events, facts and circumstances, that it is more likely than not that an impairment exists, then a quantitative analysis is performed to determine if there is any impairment.

See Note 6. Goodwill and Other Intangible Assets for additional information.

Self-Insured Group Health Insurance

The Company transitioned to a self-insured group health insurance program with certain stop-loss limits. Such costs are accrued based on known claims and estimates of incurred but not reported (“IBNR”) claims. IBNR claims are estimated using historical claim information and actuarial estimates. The accrued liability for self-insurance is included in Accrued expenses and other current liabilities on the consolidated balance sheets.

Revenue Recognition

Revenue is primarily derived from the sale of apparel and accessory merchandise through our retail stores and through our website and catalog orders. The Company recognizes revenue when its single performance obligation is met at the time when the control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Revenue from our Retail channel is recognized at the time of sale and revenue from our Direct channel is recognized upon shipment of merchandise to the customer.

The Company has a return policy where merchandise returns will be accepted within 90 days of the original purchase date. At the time of sale, the Company records a reserve for merchandise returns, which are estimated using the expected value method based on historical prior returns experience and expected future returns. The estimated sales reserve is recorded as a return asset (and corresponding adjustment to cost of goods sold) for the cost of inventory and a return liability for the amount to settle the return with a customer (and a corresponding adjustment to revenue). The return asset and return liability are recorded in Prepaid expenses and other current assets, and Accrued expenses and other current liabilities, respectively, in the consolidated balance sheets. The Company collects and remits sales and use taxes in all states in which Retail and Direct sales occur and taxes are applicable. These taxes are reported on a net basis and are thereby excluded from revenue.

The Company sells gift cards without expiration dates to customers. The Company does not charge administrative fees on unused gift cards. Proceeds from the sale of gift cards are recorded as a contract liability until the customer redeems the gift card or when the likelihood of redemption is remote. Based on historical experience, the Company estimates the value of gift card breakage and will not be escheated under statutory state unclaimed property laws. This gift card breakage is recognized as revenue over the time period established by the Company’s historical gift card redemption pattern.

The Company recognizes revenues from shipments to customers when the shipping and handling activities occur and will accrue those related costs. Shipping and handling costs are recorded in Selling, general and administrative expenses.

Costs of Goods Sold

The Company’s costs of goods sold includes the direct costs of sold merchandise, which include customs, taxes, duties, commissions and inbound shipping costs, inventory shrinkage, and adjustments and reserves for excess, aged and obsolete inventory. Costs of goods sold does not include distribution center costs and allocations of indirect costs, such as occupancy, depreciation, amortization, or labor and benefits.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of payroll and related expenses, occupancy costs, information systems costs and other operating expenses related to our stores and to our operations at our headquarters, including utilities, depreciation and amortization. These expenses also include marketing expense, including catalog production and mailing costs, warehousing, distribution and outbound shipping costs, customer service operations, consulting and software services, natural disaster related costs, professional services and other administrative costs.

Outbound shipping costs to customers recorded in Selling, general and administrative expenses were $21.4 million, $20.2 million, and $20.4 million for the Fiscal Years 2024, 2023 and 2022, respectively.

Loss Contingencies

The Company accrues for legal costs when it is both probable that a loss will be incurred, and the amount of the loss is reasonably estimable. The Company evaluates pending litigation and other contingencies at least quarterly and adjusts the accrual for such contingencies for changes in probable and reasonably estimable losses. The Company includes an estimate for related legal costs in the Selling, general and administrative expenses line item in the consolidated statements of operations and comprehensive income at the time such costs are both probable and reasonably estimable.

Advertising Costs

The Company incurs costs to produce, print, and distribute its catalogs. Catalog costs are recorded to Prepaid and other current assets in the consolidated balance sheets when paid, and expensed when the catalog is mailed to the customer (the first time the advertising occurs). Catalog advertising expenses were$18.0 million, $17.0 million, and $16.8 million for the Fiscal Years 2024, 2023 and 2022, respectively. The costs are included in Selling, general and administrative expenses in the consolidated statements of operations and comprehensive income.

Other advertising costs are recorded as incurred. Other advertising costs recorded were$21.4 million, $21.0 million, and $22.0 million for the Fiscal Years 2024, 2023 and 2022, respectively. The costs are included in Selling, general and administrative expenses in the consolidated statements of operations and comprehensive income.

Operating Leases

The Company determines if an arrangement is a lease at inception. Lease agreements will typically exist with lease and non-lease components, which are generally accounted for separately. The Company has elected not to recognize right-of-use assets or lease obligations for leases with an initial term of twelve months or less.

The Company recognizes operating lease liabilities equal to the present value of the lease payments and operating lease assets representing the right to use the underlying asset for the lease term. The lease expense for lease payments is recognized on a straight-line basis over the lease term.

As the Company’s leases do not provide an implicit rate, the Company uses an Incremental Borrowing Rate (“IBR”) based on the information available at lease commencement in determining the present value of lease payments. The IBR is estimated using a secured borrowing approach, which considers the Company’s credit rating based on a combination of public ratings, synthetic credit rating models, and secured borrowing activities. In determining the IBR, the Company also considers the economic environment at lease commencement, including prevailing market interest rates and adjustments for the Company’s credit profile. The operating lease assets include any lease payments made prior to lease commencement and are reduced by any lease incentives.

Under lease accounting guidance, for any new leases entered into, the Company assesses if it is reasonably certain to exercise lease options to extend or terminate the lease for inclusion (or exclusion) in the lease term when the Company measures the lease liability. The depreciable life of any assets and leasehold improvements are limited by the expected lease term.

For certain lease agreements, the Company allocates the consideration in the agreement to separate lease components by determining the relative standalone price of separate lease and non-lease components. Certain of the Company’s retail operating leases include variable rental payments based on a percentage of retail sales over contractual levels. Variable rental payments are recognized in the consolidated statements of operations and comprehensive income in the period in which the obligation for those payments is incurred. If such variable operating leases arise that include incentives from landlords in the form of cash, the Company will record the full amount of the incentive when specific performance criteria are met as a deferred liability. The deferred liability is amortized into income as a reduction of rent expense over the term of the applicable lease, including options to extend if they are reasonably certain to be exercised. The Company recognizes those liabilities to be amortized within one year as current liability and those greater than one year as long-term liability. For purposes of recognizing these incentives and rental expenses on a straight-line basis, the Company uses the date it obtains the legal right to use and control the lease asset to begin amortization, which is generally when the Company takes possession of the asset.

Cloud-Based Software Arrangements

Certain costs incurred to implement software development on cloud computing arrangements hosted by third party vendors are capitalized when incurred during the application development phase and recognized as Prepaid expenses and other current assets for the current portion and as Other assets for the long-term portion. Implementation costs are subsequently amortized on a straight-line basis over the expected term of the related cloud service, beginning on the date the related software or module is ready for its intended use. The amortization of cloud-based software implementation costs is recorded as a component of Selling, general, and administrative expenses, the same line item as the expense for the associated hosting arrangement. The carrying value of cloud computing implementation costs are tested for impairment when an event or circumstance indicates that the asset might be impaired. Cloud computing arrangement implementation costs are classified within operating activities in the consolidated statements of cash flows.

For the Fiscal Years ended February 1, 2025 and February 3, 2024, the Company amortized $0.9 million and $0.6 million, respectively, of cloud-based software implementation costs.

As of February 1, 2025, the Company had $9.5 million of gross capitalized cloud-based software implementation costs and $0.9 million of related accumulated amortization, for a net balance of $8.6 million, made up of $1.9 million recorded within Prepaid expenses and other current assets and $6.7 million recorded within Other assets on the Company’s consolidated balance sheets.

As of February 3, 2024, the Company had $2.5 million of gross capitalized cloud-based software implementation costs and $0.6 million of related accumulated amortization, for a net balance of $1.9 million, made up of $0.9 million recorded within Prepaid expenses and other current assets and $1.0 million recorded within Other assets on the Company’s consolidated balance sheets.

Debt Issuance Costs

The Company defers costs directly associated with acquiring third-party financing. Debt issuance costs are deferred and amortized using the effective interest rate method over the term of the related long-term debt agreement and the straight-line method for the revolving credit agreement. Debt issuance costs related to long-term debt are reflected as a direct deduction from the carrying amount of the debt on the Company’s consolidated balance sheets. From time-to-time the Company could make prepayments on the long-term debt and a portion of the debt issuance costs associated with the prepayment would be accelerated and expensed at that time.

Interest Income

The Company recorded interest income of $2.6 million, $2.8 million and $1.2 million for Fiscal Years 2024, 2023 and 2022, respectively.

Income Taxes

The Company accounts for income taxes using the asset and liability method and elected to be taxed as a C corporation. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying values and their respective tax bases, using enacted tax rates expected to be applicable in the years in which the temporary differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of the deferred tax assets will not be realized. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected, scheduling of anticipated reversals of taxable temporary differences, and considering prudent and feasible tax planning strategies.

The Company records liabilities for uncertain income tax positions based on a two-step process. The first step is recognition, where an individual tax position is evaluated as to whether it has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have less than a 50% likelihood of being sustained, no tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, the Company performs the second step of measuring the benefit to be recorded. The amount of benefit that may be recognized is the largest amount that has greater than 50% likelihood of being realized on ultimate settlement. The actual benefits ultimately realized may differ from the estimates. In future periods, changes in facts, circumstances and new information may require the Company to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in income tax expense and liability in the period in which such changes occur.

Any interest or penalties incurred are recorded in Income tax expense in the accompanying consolidated statements of operations and comprehensive income. The Company incurred immaterial amounts of interest expense and penalties related to income taxes for Fiscal Years 2024, 2023 and 2022.

Comprehensive Income

Comprehensive income is a measure of net income and all other changes in equity that result from transactions other than with equity holders and would normally be recorded in the consolidated statements of shareholders’ equity and the consolidated statements of comprehensive income. The Company’s management has determined that net income is the only component of the Company’s comprehensive income. Accordingly, there is no difference between net income and comprehensive income.

Share-Based Payment

The Company accounts for share-based payment for employees and directors by recognizing the fair value of share-based payments as an expense in the calculation of net income, based on the grant-date fair value. The Company recognizes share-based compensation expense in the periods in which the employee or director is required to provide service, which is generally over the vesting period of the individual equity instruments. The fair value of the share-based awards is determined using either the Black-Scholes option pricing model, Monte Carlo simulation model or the stock price on the date of grant.

Liability-classified awards issued to non-employees are measured at the end of the reporting period and must be re-measured at each reporting period until a grant date is established and the awards are issued. Once the grant date is established and the options are issued, they become equity-classified and the corresponding liability is reclassified from accrued liabilities to additional paid-in capital on the consolidated balance sheets. Compensation cost for each period until grant date establishment and the awards are vested is based on the change in the fair value of the liability-classified awards each reporting period. Ultimately, the share-based compensation expense recognized for a liability- classified award equals the amount for which the award granted and vested.

On December 9, 2024, the Board awarded 100,000 performance-based stock options to Elm St Advisors, LLC (“Elm Street”) under the J.Jill, Inc. Omnibus Equity Incentive Plan (“2024 Elm Street Award”). The 2024 Elm Street Award vests every two months in three equal installments as Elm Street provides its services over the six-month term and upon Elm Street successfully completing certain performance milestones. The 2024 Elm Street Award expires three years from the date of grant if unexercised. Refer to Note 19. Subsequent Events for additional details.

Share-based awards granted by the Company during Fiscal Year 2024 included both equity-classified and liability-classified awards and compensation expense for these awards was recognized in Selling, general, and administrative expenses in the consolidated statements of operations and comprehensive income. Forfeitures were recorded as they occurred.

All of the share-based awards granted by the Company to its employees during Fiscal Years 2024, 2023 and 2022 were considered equity-classified awards and compensation expense for these awards was recognized in Selling, general, and administrative expenses in the consolidated statements of operations and comprehensive income. Forfeitures were recorded as they occurred.

Earnings Per Share

Basic net income per common share attributable to common shareholders is calculated by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income per common share attributable to common shareholders is calculated by dividing net income attributable to common shareholders by the diluted weighted average number of common shares outstanding for the period. There were 0.6 million,0.3 million and 0.3 million of potentially dilutive securities outstanding for Fiscal Years 2024, 2023 and 2022, respectively.

Credit Card Agreement

During Fiscal Year 2023 the Company entered into an amended and restated arrangement with a third party to provide a private label credit card to its customers through January 31, 2031, and will automatically renew thereafter for successive one-year terms, unless either party provides a notice of intention to terminate. The Company does not bear the credit risk associated with the private label credit card at any point prior to the termination of the agreement, at which point the Company would be obligated to purchase the receivables.

The Company receives royalty payments through its private label credit card agreement. The royalty payments are recognized as revenue when they are earned each month. Royalty payments recognized were$3.7 million, $2.4 million, and $3.9 million for the Fiscal Years 2024, 2023 and 2022, respectively.

The Company also receives reimbursements for costs of marketing programs related to the private label credit card, which are recorded as revenue as earned and the costs incurred are recorded as Selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income. Reimbursements for costs of marketing programs of$1.6 million, $1.3 million, and $1.6 million were recognized in revenue in Fiscal Years 2024, 2023 and 2022, respectively.

The previous credit card agreement provided a signing bonus to the Company, which was recognized as revenue through August 2023. The amended and restated agreement provided for an upfront payment which is being recorded as revenue on a straight line basis through January 2031. See Note 4. Revenues for additional information related to our upfront payment.

Employee Benefit Plan

The Company has a 401(k) retirement plan covering all eligible employees who meet certain age and employment requirements pursuant to Section 401(k) of the Internal Revenue Code. Subject to certain dollar limits, eligible employees may contribute a portion of their pretax annual compensation to the plan, on a tax-deferred basis. The plan operates on a calendar year basis. The Company contributes up to 50% of the first 6% of the gross salary of the employee, which vests immediately. Discretionary contributions made by the Company for the Fiscal Years 2024, 2023 and 2022 were $1.9 million, $1.5 million, and $1.2 million, respectively.

Self-Insured Group Health Insurance Reserves

During the fourth quarter of Fiscal Year 2024, the Company transitioned to a self-insured group health insurance program. Prior to this transition, the Company had fully insured cost group health insurance programs. The Company is now self-insured through retentions or deductibles with stop-loss insurance for medical claims that reach a certain limit per claim. The Company records its liability for estimated incurred losses based on historical claim data in the accompanying consolidated financial statements on an undiscounted basis. While the Company believes these reserves to be adequate, it is possible that the ultimate liabilities will exceed such estimates. Such costs are accrued based on known claims and estimates of incurred but not reported (“IBNR”) claims. IBNR claims are estimated using historical claim information and actuarial estimates. The accrued liability for self-insurance is included in Accrued expenses and other current liabilities on the consolidated balance sheets.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of cash held in financial institutions and accounts receivable. The Company considers the credit risk associated with these financial instruments to be minimal. Cash is held by financial institutions with high credit ratings and the Company has not historically sustained any credit losses associated with its cash balances. The Company evaluates the credit risk associated with accounts receivable to determine if an allowance for estimated credit losses is necessary. As of February 1, 2025 and February 3, 2024, the Company determined thatno allowance for estimated credit losses was necessary.

3. Accounting Standards

Recently Issued Accounting Standards

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative”. This ASU amends the FASB Accounting Standards Codification in response to the SEC’s disclosure update and simplification initiative. This guidance will be applied prospectively with effective date for each amendment to be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is assessing what impact this guidance will have on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures”. This ASU requires enhanced income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated information related to income taxes paid. The other amendments in this update improve the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit), and (2) removing disclosures that are no longer considered cost beneficial or relevant. The amendments in ASU 2023-09 are effective for the fiscal year ending January 31, 2026. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its disclosures in the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, " Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)." Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. These standards provide guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. The

Company is currently evaluating the impact that this guidance will have on its disclosures in the Company’s consolidated financial statements.

Recently Adopted Accounting Standards

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting, Improvements to Reportable Segment Disclosures”. This ASU enhances the disclosures required about a public entity’s reportable segments in its annual and interim condensed consolidated financial statements. The amendments in this update require additional detailed and enhanced information about reportable segments’ expense, including significant segment expenses and other segment items that bridge segment revenue, significant expenses to segment profit or loss. The ASU also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) on an annual basis as well as an explanation of how the CODM uses the reported measures and other disclosures. The amendments in this update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The Company adopted ASU 2023-07 forthe Fiscal Year ended February 1, 2025. Refer to Note 12. Segment Reporting for additional details.

4. Revenues

Disaggregation of Revenue

The Company sells its apparel and accessory merchandise through its Retail and Direct channels. The following table presents revenues disaggregated by revenue source (in thousands):

Remaining Performance Obligations

As of February 1, 2025, the transaction price allocated to remaining performance obligations amount to $0.5 million, which relate to the marketing and promotion of the Company’s private label credit card program. This amount will be recognized as revenue evenly through January 2031.

Contract Liabilities

The Company recognizes a contract liability when it has received consideration from the customer and has a future obligation to the customer. Total contract liabilities consisted of the following (in thousands):

(1)

The current and noncurrent portions of the upfront payment received in connection with the private label credit card agreement are included in Accrued expenses and other current liabilities and Other long-term liabilities, respectively, in the Company’s consolidated balance sheets.

(2)

Revenue recognized for Fiscal Year 2024 related to the contract liability balance as of February 3, 2024 was $3,931.

For Fiscal Years 2024, 2023 and 2022, the Company recognized approximately$10.8 million,$11.1 million, and $10.5 million, respectively, of revenue related to gift card redemptions and breakage. Revenue recognized consists of gift cards that were part of the unredeemed gift card balance at the beginning of the period as well as gift cards that were issued and redeemed during the period.

As of January 28, 2023, contract liabilities for a signing bonus and the unredeemed gift card liability were $0.1 million and $7.1 million, respectively.

Practical Expedients and Policy Elections

The Company excludes from revenue all amounts collected from customers for sales taxes that are remitted to taxing authorities.

Shipping and handling activities that occur after control of related goods transfers to the customer are accounted for as fulfillment activities rather than assessing these activities as performance obligations.

The Company does not disclose the transaction price allocated to remaining performance obligations for contracts with customers that have an expected duration of one year or less. The Company applies the optional exemption to not disclose the transaction price allocated to remaining performance obligations where revenue represents sales-or-usage-based royalty. This optional exemption applies to royalty payments received from allowing a third party to use the J.Jill brand in providing a private label credit card to its customers through January 31, 2031. These royalties are based on an agreed-upon percentage of sales generated through the use of the private label credit card.

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets include the following (in thousands):

(a)

Other current assets include restricted cash of $0.4 million which is used solely for funding employee healthcare costs.

6. Goodwill and Other Intangible Assets

The balance of goodwill was $59.7 million at February 1, 2025 and February 3, 2024, respectively. The Company didnot recognize any impairment losses for Fiscal Years 2024 and 2023. The accumulated goodwill impairment losses as of February 1, 2025 are $137.3 million.

A summary of other intangible assets as of February 1, 2025 and February 3, 2024 is as follows (in thousands):

Impairment Tests

General

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment at least annually, or more frequently when events or changes in circumstances indicate that the carrying value may not be recoverable. Definite-lived intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable. Judgments regarding indicators of potential impairment are based on market conditions and operational performance of the business.

The Company’s policy is to perform a quantitative analysis of goodwill and indefinite-lived intangible assets every three years. During those years when a quantitative assessment is not performed initially, the Company will assess these assets for impairment initially using a qualitative approach to determine whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If management concludes, based on its assessment of relevant events, facts and circumstances, that it is more likely than not that an impairment exists, then a quantitative analysis is performed to determine if there is any impairment.

For goodwill, the quantitative assessment requires comparing the fair value of a reporting unit to its carrying value, including goodwill. The Company estimates fair value using the income approach. The income approach uses a discounted cash flow model, which involves significant estimates and assumptions, including preparation of revenue and profitability growth forecasts, selection of a discount rate, and selection of a terminal year multiple. These assumptions are classified as Level 3 inputs. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and no further testing is required. If the carrying amount exceeds the reporting unit’s fair value, a goodwill impairment charge is recognized for the amount in excess, not to exceed the total amount of goodwill allocated to that reporting unit. An impairment charge is recorded within the Company’s consolidated statements of operations and comprehensive income.

For other intangible assets, impairment losses are recorded to the extent that the carrying value of the intangible asset exceeds its fair value. The Company measures the fair value of its trade name using the relief from royalty method and the fair value of customer relationships using a recoverability approach. The most significant estimates and assumptions inherent in these approaches are the preparation of revenue forecasts, selection of royalty and discount rates and a terminal year multiple. These assumptions are classified as Level 3 inputs.

2024 Impairment Tests

For goodwill and other intangible assets, the Company performed the required impairment tests applying the qualitative approach andno impairments were indicated.

2023 Impairment Tests

During the fourth quarter of Fiscal Year 2023, the Company performed its annual assessment by electing to perform a quantitative assessment (the “2023 Impairment Test”). The 2023 Impairment Test was performed using the income approach (or discounted cash flows method) for goodwill, the relief-from-royalty method for indefinite-lived intangible assets and a recoverability analysis for definite-lived intangible assets. The estimated fair values of the reporting units and the indefinite-lived intangible assets, and the estimated undiscounted cash flows from the definite-lived intangible assets were above their carrying values resulting in no impairment of goodwill, the Company’s trade name (indefinite-lived intangible asset) and the Company’s customer list (definite-lived intangible asset). The most significant estimates and assumptions inherent in this approach are the preparation of revenue forecasts, selection of royalty and discount rates and a terminal year multiple. These assumptions are classified as Level 3 inputs. The key assumptions used under the income approach and relief-from-royalty method for the Fiscal Year 2023 Impairment Tests included the following:

•

Future cash flow assumptions - The Company’s projections for itstwo reporting units, Direct and Retail sales channels, were from historical experience and assumptions regarding future revenue growth and profitability trends. The Company’s analyses incorporated an assumed period of cash flows of 5 years with a terminal value.

•

Discount rate - The discount rate was based on an estimated weighted average cost of capital (“WACC”) for each reporting unit. The components of WACC are the cost of equity and the cost of debt, each of which requires judgment by management to estimate. The Company developed its cost of equity estimate based on perceived risks and predictability of future cash flows. The WACC used to estimate the fair values of the Company’s reporting units was 20.0%. A 1% change in this discount rate would not result in a goodwill impairment charge.

•

Royalty rate - The royalty rates utilized consider external market evidence and internal financial metrics including a review of available returns after the consideration of property, plant and equipment, working capital and other intangible assets. The royalty rate used to estimate the available returns for the Company’s trade name was 2.0%.

For goodwill and other intangible assets, the Company performed the required impairment tests applying the quantitative approach andno impairments were indicated.

Definite-Lived Intangible Assets

The definite-lived intangible assets are amortized over the period the Company expects to receive the related economic benefit, which for customer lists is based upon estimated future net cash inflows. The estimated useful lives of intangible assets are as follows:

Total amortization expense for these amortizable intangible assets was $5.2 million, $6.9 million, and $7.5 million for the Fiscal Years 2024, 2023 and 2022, respectively.

The estimated amortization expense for each of the next five years and thereafter is as follows (in thousands):

7. Property and Equipment

Property and equipment at February 1, 2025 and February 3, 2024 consist of the following (in thousands):

Construction in progress is primarily comprised of leasehold improvements, furniture, fixtures and equipment related to unopened retail stores and costs incurred related to the implementation of certain computer software and hardware.

Capitalized software, subject to amortization, included in property and equipment at February 1, 2025 and February 3, 2024 had a cost basis of approximately$55.8 million and $54.6 million, respectively, and accumulated amortization of$45.6 million and $41.3 million, respectively. As of February 1, 2025 and February 3, 2024, internal use software costs capitalized were $3.5 million and $8.9 million, respectively.

Total depreciation expense recorded within Selling, general and administrative expenses on the consolidated statements of operations was$16.1 million, $16.0 million, and $18.2 million, for the Fiscal Years 2024, 2023 and 2022, respectively.

During Fiscal Years 2024 and 2023, the Company recorded noncash impairment charges of $0.5 million and $0.2 million, respectively, related to leasehold improvements at certain store locations driven by the actual performance at these locations. During Fiscal Year 2022, due to the Company’s revised outlook on future cash flows at certain store locations, the Company incurred noncash impairment charges of $0.8 million related primarily to leasehold improvements and furniture and fixtures at these locations.

The Company capitalized $0.4 million, $0.6 million and an immaterial amount of interest in connection with construction in progress for Fiscal Years 2024, 2023 and 2022, respectively.

8. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities include the following (in thousands):

(a)

Included within Accrued corporate expenses as of February 1, 2025 is a liability-classified share-based payment of $0.4 million related to stock options granted to Elm Street consultant, which are subject to remeasurement at each reporting date until a grant and vesting date is established. See Note 17 Share-Based Payment for further details.

The following table reflects the changes in the accrued returns reserve for Fiscal Years 2024, 2023 and 2022 (in thousands):

The following table reflects the changes in the accrued self-insurance reserve for Fiscal Year 2024 (in thousands):

9. Debt

The components of the Company’s outstanding long-term debt at February 1, 2025 and February 3, 2024 were as follows (in thousands):

The original issue discount and capitalized fees and expenses are amortized over the related term of the debt.

The Company recorded interest expense related to long-term debt of $14.1 million, $23.8 million, and $17.7 million, in Fiscal Years 2024, 2023 and 2022, respectively. During Fiscal Years 2024, 2023 and 2022, $1.6 million, $2.8 million and $3.1 million of debt discount and debt issuance cost related to long-term debt were amortized to interest expense, respectively.

Term Loan Credit Agreement

On April 5, 2023, the Company and Jill Acquisition LLC (the “Borrower”) entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) by and among the lenders party thereto and Jefferies Finance LLC, as administrative and collateral agent. The Term Loan Credit Agreement provides for a secured term loan facility in an aggregate principal amount of $175.0 million with a maturity date of May 8, 2028 (the “Term Loan Facility”). Loans under the Term Loan Credit Agreement bear interest at the Borrower’s election at (1) Base Rate (as defined in the Term Loan Credit Agreement) plus 7.00% or (2) Adjusted Term SOFR (as defined in the Term Loan Credit Agreement) plus 8.00%, with Adjusted Term SOFR subject to a floor rate of 1.00%.

In conjunction with the entry into the Term Loan Credit Agreement, the Company paid $3.7 million in third-party fees related to legal, consulting, agent and other fees. Of these costs, $3.1 million were deferred and presented as a direct reduction from the carrying amount of long-term debt on the consolidated balance sheet as of February 3, 2024 and are amortized through the line item Interest expense in the Company’s consolidated statements of operations and comprehensive income over the term of the Term Loan Credit Agreement using the effective interest method.

The Term Loan Facility is subject to mandatory repayment, subject to certain exceptions, including (i)100% of the net proceeds of any incurrence of debt other than debt permitted in the Term Loan Credit Agreement, (ii)100% of the net cash proceeds of certain asset sales/insurance proceeds, subject to reinvestment rights and certain other exceptions, and (iii) 95 days after the last day of the Fiscal Year, an annual payment ranging from 25%-75%, based on the First Lien Net Leverage Ratio, of the annual Excess Cash Flow (“ECF”), less certain voluntary prepayments made during the year, as defined in the Term Loan Credit Agreement.

The Term Loan Facility may be voluntarily prepaid after the one-year anniversary but on or prior to the two-year anniversary, subject to a premium of 3.0% of the aggregate principal amount being prepaid, and after the two-year anniversary without premium.

For Fiscal Year 2024, the Company would be required to make an Excess Cash Flow ("ECF") payment of $11.8 million prior to May 7, 2025 under the terms of the Term Loan Credit Agreement. However, the voluntary principal prepayments discussed below satisfied the ECF payment requirement and, accordingly, no ECF payment is required.

For Fiscal Year 2023, the amount that was expected to be repaid as an ECF payment of $26.6 million is included in the line item “Current portion of long-term debt” in the Company’s consolidated balance sheet for Fiscal Year 2023, in accordance with the provisions of the Term Loan Credit Agreement.

On May 10, 2024, the Company made a voluntary principal prepayment of $58.2 million on the Term Loan Credit Agreement, in lieu of the previously expected ECF payment of $26.6 million. The expected ECF payment was rejected by the lenders as permitted under the provisions of the Term Loan Credit Agreement. On June 21, 2024, the Company made an additional voluntary principal prepayment of $27.2 million (See Note 15. Shareholders’ Equity, Common Stock Issuance, for additional information). Together with the required quarterly payments, the Company has repaid $94.2 million in principal under the Term Loan Credit Agreement in Fiscal Year 2024. In connection with the voluntary principal prepayments, the Company paid a $2.6 million premium, amounting to 3% on the aggregate principal amount being prepaid, and $1.6 million towards interest, in accordance with the provisions of the Term Loan Credit Agreement. In connection with the voluntary principal prepayments discussed above, for Fiscal Year 2024, the Company recognized a loss on extinguishment of debt of approximately $8.6 million, consisting of $6.0 million of accelerated amortization of the discount and fees and $2.6 million of prepayment premium, in its consolidated statements of operations and comprehensive income. As of February 1, 2025, the remaining Term Loan Facility principal balance was $74.3 million, which is to be paid upon maturity on May 8, 2028. The remaining unamortized discount and fees of $4.9 million will continue to be amortized over the remaining term through maturity.

The Borrower’s obligations under the Term Loan Credit Agreement are guaranteed by the Company and J.Jill Gift Card Solutions, Inc., a Florida corporation wholly-owned by Jill Acquisition LLC (“Jill Gift Card Solutions” and collectively with the Company, the “Guarantors”), and are secured by substantially all of the real and personal property of the Borrower and the Guarantors, subject to certain customary exceptions. The Term Loan Credit Agreement includes customary negative covenants for term loan agreements of this type, including covenants limiting the ability of the Borrower and the Guarantors to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and purchases, pay dividends and distributions, enter into transactions with affiliates, and make payments in respect of junior indebtedness, in each case subject to customary exceptions for term loan agreements of this type. The Term Loan Credit Agreement also includes certain customary representations and warranties, affirmative covenants, certain financial covenants and events of default, including but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under the Employee Retirement Income Security Act of 1974 (“ERISA”), certain final non-appealable judgments that are not covered by a reputable and solvent insurance company, certain defaults under other indebtedness, change of control and certain Title 11 proceedings.

As of February 1, 2025, the Company was in compliance with all covenants.

Priming and Subordinated Term Loans

The Company was party to a priming and a subordinated credit agreement, dated as of September 30, 2020, by and among J.Jill, Inc., Jill Acquisition LLC, as the borrower, the lenders party thereto from time to time and Wilmington Trust, National Association, as administrative agent and collateral agent (as amended, the “Subordinated Credit Agreement” and, such facility, the Subordinated Facility), until it was repaid in full on April 5, 2023.

Asset-Based Revolving Credit Agreement

On May 8, 2015, the Company entered into afive-year secured $40.0 million asset-based revolving credit facility agreement (the “ABL Facility”). The ABL Facility had an initial maturity of May 8, 2020. On June 12, 2019, this ABL Facility was amended to extend the termination date to May 8, 2023.

On April 15, 2022, the Company entered into an amendment to the ABL Facility, whereby (i) the maturity date of the ABL Facility was extended from May 8, 2023 to May 8, 2024, and (ii) changed the benchmark interest rate applicable to the loans under the ABL Facility from LIBOR to the forward-looking secured overnight financing rate (“Term SOFR”).

On May 10, 2023, the Company entered into Amendment No. 6 to the ABL Credit Agreement, by and among the Company, J.Jill Gift Card Solutions, the other guarantors party thereto the other lenders party thereto, and CIT Finance LLC, as the administrative agent and collateral agent. This amendment extended the maturity date of the ABL Credit Agreement from May 8, 2024 to May 10, 2028 (or 180 days prior to the maturity date of the Company’s Term Loan Credit Agreement if the maturity date of such Term Loan Facility has not been extended to a date that is at least 180 days after the maturity date of the ABL Credit Agreement). The other terms and conditions of the ABL Facility remain substantially unchanged. The benchmark interest rate applicable to the loans under the ABL Facility is the forward-looking secured overnight financing rate.

On December 1, 2023, the Company entered into Amendment No. 7 (the “ABL Amendment”) to the ABL Credit Agreement, by and among the Company, Jill Acquisition LLC, J.Jill Gift Card Solutions, Inc. (collectively, the “Borrowers”), the other guarantors party thereto, the other lenders party thereto, and CIT Finance LLC, as the administrative agent and collateral agent. The ABL Amendment made a technical revision for administrative purposes which removed the requirement for a Borrower’s non-negotiable bill of lading, non-negotiable sea waybill or other similar shipping document (each a “Non-Negotiable Document”) to state on its face that the inventory that is subject to such Non-Negotiable Document is subject to the lien of the administrative agent. In connection with removing this requirement, a $500,000 in-transit inventory reserve amount will be applied to eligible in-transit inventory on the borrowing base certificate during any period in which excess liability is less than $5.0 million. This increase in the reserve decreases the borrowing base by the same amount during an in- transit inventory reserve period.

The ABL Facility consists of revolving loans and swing line loans. Borrowings classified as revolving loans under the ABL Facility may be maintained as either Term SOFR or Base Rate loans, each of which has a variable interest rate plus an applicable margin. Borrowings classified as swing line loans under the ABL Facility are Base Rate loans. Term SOFR loans under the ABL Facility accrue interest at a rate equal to Term SOFR plus a spread ranging from 2.25% to 2.50%, depending on borrowing amounts. Base Rate loans under the ABL Facility accrue interest at a rate equal to (i) the greatest of (a) the financial institution’s prime rate, (b) the overnight Federal Funds Effective Rate plus 0.50%, (c) Adjusted Term SOFR (as adjusted by any Floor) plus 1.00% (ii) a spread ranging from 1.25% to 1.50%, depending on borrowing amounts.

Interest on each Term SOFR loan is payable on the last day of each interest period and no more than quarterly, and interest on each Base Rate loan is payable in arrears on the last business day of April, July, October and January. For both Term SOFR and Base Rate loans, interest is payable periodically upon repayment, conversion or maturity, with interest periods ranging between 30 to 180 days at the election of the Company, or 12 months with the consent of all lenders.

The ABL Facility also requires the quarterly payment, in arrears, of a commitment fee. The commitment fee is payable in an amount equal to (i)0.375% for each calendar quarter during which historical excess availability is greater than 50% of availability, and (ii)0.25% for each calendar quarter during which historical excess availability is less than or equal to 50% of availability.

The Company hadno short-term borrowings under the Company’s ABL Facility as of February 1, 2025 and February 3, 2024. During the fiscal year ended February 1, 2025, no amount was drawn or outstanding under the ABL Facility. Based on the terms of the agreement and the increase for the letters of credit, the Company’s available borrowing capacity under the ABL Facility as of February 1, 2025 and February 3, 2024 was $35.7 million and $34.2 million, respectively.

The Company incurred an immaterial amount of interest expense related to the ABL facility for Fiscal Years 2024, 2023 and 2022, respectively.

The Company incurred an immaterial amount of ABL interest amortization being booked over maturity of the ABL for Fiscal Years 2024, 2023, and 2022.

Borrowings under the ABL Facility are secured by a first lien on accounts receivable and inventory. In connection with the ABL Facility, the Company is subject to various financial reporting (including with respect to liquidity), financial and other covenants. Affirmative covenants include providing timely quarterly and annual financial statements and prompt notification of the occurrence of anyevent of default or any other event, change or circumstance that has had, or could reasonably be expected to have, a material adverse effect as defined in the ABL Facility. In addition, there are negative covenants, including certain restrictions on the Company’s ability to incur additional indebtedness, create liens, enter into transactions with affiliates, transfer assets, pay dividends, consolidate or merge with other entities, make advances, investments and loans or modify its organizational documents. The ABL Facility also includes certain financial maintenance covenants, including a requirement to maintain a fixed charge coverage ratio greater than or equal to 1.00:1.00 if availability under the ABL Facility is less than specified levels. As of February 1, 2025 and February 3, 2024, the Company was in compliance with all financial covenants in effect.

If an event of default occurs under the ABL Facility, the Company’s obligations may be accelerated. In addition, a 2.00% interest surcharge will be imposed on overdue amounts.

Letters of Credit

As of February 1, 2025 and February 3, 2024, there were outstanding letters of credit of $4.3 million and $5.8 million, respectively, which reduced the availability under the ABL Facility. As of February 1, 2025, the maximum commitment for letters of credit was $15.0 million. Letters of credit accrue interest at a rate equal to the applicable margin with respect to revolving loans maintained as Term SOFR loans under the ABL facility. The Company primarily used letters of credit to secure payment of workers’ compensation claims and customs bonds. Letters of credit are generally obtained for aone-year term and automatically renew annually and would only be drawn upon if the Company fails to comply with its contractual obligations.

Payments of Long-term Debt Obligations Due by Period

As of February 1, 2025, the minimum future principal amounts payable under the Company’s outstanding long-term debt consists of the remaining Term Loan Facility principal balance of $74.3 million due upon maturity on May 8, 2028.

10. Fair Value Measurements

Certain assets and liabilities are carried at fair value in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•

Level 1 - Quoted prices in active markets for identical assets or liabilities.

•

Level 2 - Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar assets or liabilities in markets that are not active; or other inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities, including interest rates and yield curves, and market corroborated inputs.

•

Level 3 - Unobservable inputs for the asset or liability that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These are valued based on management’s estimates and assumptions that market participants would use in pricing the asset or liability.

The following tables present the carrying value and fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of February 1, 2025 and February 3, 2024, respectively (in thousands):

The Company’s debt instruments include the Term Loan Credit Agreement. The debt instruments are recorded at cost, net of debt issuance costs and any related discount. The fair value of the debt instruments is obtained based on observable market prices quoted on public exchanges for similar instruments.

The Company believes that the carrying amounts of its other financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and any amounts drawn on its revolving credit facilities, consisting primarily of instruments without extended maturities, based on management’s estimates, approximates their fair value due to the short-term maturities of these instruments.

Assets and Liabilities with Recurring Fair Value Measurements - Certain assets and liabilities may be measured at fair value on an ongoing basis. We did not elect to apply the fair value option for recording financial assets and financial liabilities. Other than total debt and liability-classified stock options, we do not have any assets or liabilities which we measure at fair value on a recurring basis.

Assets and Liabilities with Nonrecurring Fair Value Measurements - Certain assets and liabilities are not measured at fair value on an ongoing basis. These assets and liabilities, which include long-lived assets, goodwill, and intangible assets, are subject to fair value adjustments as part of the related impairment tests. Assumptions used to measure these fair value adjustments are classified as Level 3 inputs. Other than impairment accounting adjustments, no adjustments to fair value or fair value measurements were required for non-financial assets and liabilities for all periods presented. See Note 6. Goodwill and Other Intangible Assets, for additional information.

11. Commitments and Contingencies

The Company is subject to various legal proceedings that arise in the ordinary course of business. Although the outcome of such proceedings cannot be predicted with certainty, management does not believe that the Company is presently party to any legal proceedings the resolution of which management believes would have a material adverse effect on the Company’s financial statements. The Company establishes reserves for specific legal matters, including legal costs, when the Company determines that the likelihood of an unfavorable outcome is probable, and the loss is reasonably estimable.

Concentration Risk

An adverse change in the Company’s relationships with its key suppliers, or loss of the supply of one of the Company’s key products for any reason, could have a material effect on the business and results of operations of the Company. One supplier accounted for 11.0% of the Company’s purchases during Fiscal Year 2024. There are many potential suppliers in the industry that could become a supplier if we were to lose one of our large suppliers.

Other Commitments

The Company enters into other cancelable and noncancelable commitments. Typically, these commitments are for less than one year in duration and are principally for the procurement of inventory. Preliminary commitments with the Company’s merchandise vendors are made approximately six months in advance of the planned receipt date.

12. Segment Reporting

Adoption of ASU 2023-07

In Fiscal Year 2024, the Company adopted ASU 2023-07, “Improvements to Reportable Segment Disclosures.” This ASU enhances the segment reporting disclosures provided in the Company’s annual and interim consolidated financial statements.

Operating Segments

The Company operates throughtwo operating segments, Retail and Direct, based on the criteria used by the Chief Operating Decision Maker (“CODM”) to monitor performance and allocate resources. For reporting purposes, these operating segments have been aggregated into asingle reportable segment due to their similar economic characteristics and shared resources. The segment derives its revenues from the sale of apparel and accessory merchandise through the retail stores and website and catalog orders.

Performance Assessment and Resource Allocation

The Company’s CODM is the Chief Executive Officer. To assess the performance of the Company, the CODM primarily uses net income to analyze shopping behaviors and allocate resources effectively to enhance sales and margins. Netincome is integral to the annual budgeting and forecasting process, with monthly reviews of variances from actuals against plan and forecast when making decisionson marketing spend, capital investments, and personnel. The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

An extract of the financial information that is regularly provided to the CODM for the Company’s single reportable segment is listed below:

(a)

Other segment items represent the Company's order management system upgrade, management incentives, impairments of long-lived assets, loss on extinguishment of debt, loss on debt refinancing, interest expense, interest income, income taxes, and depreciation and amortization.

Geographic Information

All of the Company’s identifiable assets are located in the United States, which is where the Company is domiciled. The Company has immaterial sales outside the United States. No customer represents more than 10% of total revenues for any period presented.

13. Operating Leases

As of February 1, 2025, the Company leases all of its retail stores, a distribution center, and office space. As of that same date, the Company did not have any financing leases and no operating leases contained any material residual value guarantees or material restrictive covenants. Certain of the Company’s retail operating leases include variable rental payments based on a percentage of retail sales over contractual levels.

Some retail leases include one or more options to renew, with renewal terms that canextend the lease term fromone tofifteen years. The Company’s distribution center has renewal terms that can extend the lease term up totwenty years. The exercise of lease renewal options is at the Company’s sole discretion.

The Company maintained a tenant incentive liability of $0.2 million and $0.3 million as of February 1, 2025 and February 3, 2024, respectively, related to certain variable retail leases.

The components of lease expense were as follows (in thousands):

For Fiscal Years 2024 and 2022, noncash impairment charges of $0.3 million and $0.6 million, respectively, were recorded. The impairment charges related primarily to a right-of-use asset which arose from the revised sublease assumptions relating to one floor of the corporate headquarters located in Quincy, Massachusetts that was vacated in July 2019. There wereno impairments recorded in Fiscal Year 2023.

For Fiscal Years 2024, 2023, and 2022, Selling general and administrative expenses included common area maintenance expense of$12.2 million, $13.2 million and $13.1 million, respectively.

For Fiscal Years 2024, 2023, and 2022, the total cash paid for amounts included in the measurement of operating lease liabilities was$43.2 million, $45.1 million and $41.5 million, respectively.

The weighted average remaining lease term and weighted average discount rate for our operating leases are as follows:

Maturities of lease liabilities as of February 1, 2025 were as follows (in thousands):

(1)

There wereno operating leases with legally binding minimum lease payments for leases signed but for which the Company has not taken possession.

14. Income Taxes

The provision for income taxes for the Fiscal Years 2024, 2023, and 2022 consists of the following (in thousands):

The effective tax rate for the fiscal year ended February 1, 2025 differs from the federal statutory rate of 21% primarily due to the impact of state and local income taxes and the impact of executive compensation limitations.

A reconciliation of the federal statutory income tax rate of 21% to the Company’s effective tax rate is as follows for the periods presented:

The components of deferred tax assets (liabilities) were as follows (in thousands):

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax bases of assets and liabilities using statutory rates. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets on a quarterly basis. During the fiscal year ended February 3, 2024, the Company reassessed the valuation allowance noting the shift of positive evidence outweighing negative evidence, including continued strong historical profits since the fiscal year 2021 emergence from the COVID-19 pandemic and expectations regarding future profitability. After assessing both the positive evidence and negative evidence, management determined it was more likely than not that the Company will realize all of its deferred tax assets as of the fiscal year ended February 3, 2024.

As of February 1, 2025, the Company doesnot have a federal net operating loss carryforward. The Company has $0.3 million of state net operating loss carryforwards that would expire if unutilized by the tax year 2040. The Company doesnot have a federal business interest carryforward. The Company has a $0.1 million of state business interest carryforwards, available to offset future taxable income. This carryforward can be carried forward indefinitely for state tax purposes.

The following table summarizes the changes in the Company’s unrecognized income tax benefits for Fiscal Years 2024, 2023 and 2022 (in thousands):

The Company had gross unrecognized tax benefits of $0.1 million, $0.1 million and $0.4 million as of February 1, 2025, February 3, 2024 and January 28, 2023, respectively, recorded in Other liabilities on the consolidated balance sheets. The Company will recognize interest and penalties, if any, related to uncertain tax positions in Income tax expense. As of February 1, 2025, no significant amount of penalties or interest have been accrued. We expect that the remaining unrecognized income tax benefits will be released in the next 12 months.

For federal and state income tax purposes, the Company’s tax years remain open under statute for Fiscal Year 2017 to present.

15. Shareholders’ Equity

Common Stock Issuance

On June 12, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC, William Blair & Company, L.L.C., and TD Securities (USA) LLC (collectively, the “Underwriters”), as well as TowerBrook Capital Partners, LP (“TowerBrook”), an affiliate and the Company’s largest stockholder (the “Selling Stockholder”). Pursuant to the Underwriting Agreement, (i) the Company offered, issued, and sold 1,000,000 shares of its common stock and, (ii) the Selling Stockholder offered and sold 1,300,000 shares of the Company’s common stock, which included 300,000 shares sold as a result of the Underwriters’ full exercise of their option to purchase additional shares (collectively, the “Equity Offering”). The shares were offered at an offering price of $31.00 per share, less underwriting discounts and commissions. The Equity Offering was completed on June 14, 2024.

The gross proceeds to the Company from the issuance of the Company’s 1,000,000 shares amounted to $31.0 million and the Company didnot receive any proceeds from the shares sold by the Selling Stockholder. After deducting underwriting discounts and commissions of approximately $1.5 million, the net proceeds to the Company from the Equity Offering were $29.5 million. The issuance of the 1,000,000 new shares sold by the Company increased the total number of outstanding shares and are reflected in the stockholders’ equity section of the Company’s consolidated balance sheet as of February 1, 2025. In connection with the Equity Offering, the Company incurred $0.8 million of third-party expenses. The net proceeds, after deducting both underwriting discounts and commissions and third- party expenses have been recorded in Additional paid-in capital and are detailed in the consolidated statements of shareholders’ equity for the fiscal year ended February 1, 2025.

The Company utilized the net proceeds from its sale of shares in the Equity Offering for repayment of its debt and general corporate purposes.

Share Repurchase Program

On December 6, 2024, the Board approved a share repurchase program (the “Share Repurchase Program”), under which the Company is authorized to repurchase up to $25.0 million of the Company’s common stock over the nexttwo years. Under the Share Repurchase Program, shares of the Company’s common stock may be purchased from time to time through open market or private transactions, block trades, or such other manner as the Company may determine, in accordance with applicable insider trading and other securities laws and regulations under the Exchange Act and share repurchase parameters determined by the Board.

During the year ended February 1, 2025, the Company repurchased 19,831 shares of its Common Stock for an aggregate purchase price of $0.5 million. As of February 1, 2025, the Company had $24.5 million of availability remaining under its stock repurchase authorization. The purchase price of these share repurchases, and the related fees, have been classified as Treasury stock in the accompanying consolidated balance sheet as of February 1, 2025. There wereno shares repurchased by the Company during the fiscal year ended February 3, 2024.

The timing and the number of shares repurchased are subject to the discretion of the Company and may be affected by market conditions and other factors. The Share Repurchase Program does not obligate the Company to acquire any particular amount of common stock and may be modified, suspended or terminated at any time.

During Fiscal Year 2024, the Board of Directors (the “Board”) declared total cash dividend payments of $0.21 per share of common stock (the “Dividend”). During Fiscal Year 2024, the Company paid$2.9 millionin cash dividends and $0.1 million in dividend equivalent units relating to employee share-based payment awards. While dividends are generally recorded as a reduction to Retained earnings, since the Company has an accumulated deficit, dividends are recorded as a reduction to Additional paid-in capital.

The Company intends to pay cash dividends quarterly in the future, subject to market conditions and at the discretion of the Board. Our ability to pay dividends in the future is based on a number of factors, such as earnings levels, capital requirements, restrictions imposed by applicable law, our overall financial condition, restrictions in our debt agreements and the ability of our operating subsidiaries to pay dividends to us as a holding company.

16. Net Income Per Share

The following table summarizes the computation of basic and diluted net income per common share for the Fiscal Years 2024, 2023 and 2022 (in thousands, except share and per share data):

Share-based rewards are excluded from the diluted earnings per share calculation when their inclusion would have an antidilutive effect such as when the Company has a net loss for the reporting period, or if the assumed proceeds per share of the award is in excess of the related fiscal period’s average price of the Company’s common stock. Accordingly, there were 98,338,57,914, and 106,137 such awards excluded for the Fiscal Years 2024, 2023 and 2022, respectively.

Duringthe fiscal year ended February 1, 2025, the Company issued 3,572,664 shares of common stock following the exercise of 3,573,707 warrants (the “Warrants”) that were previously issued pursuant to a Warrant Agreement, dated as of October 2, 2020, by and between the Company and American Stock Transfer & Trust Company, LLC (the “Warrant Agreement”). The exercise price of the Warrants was net share settled as per the terms of the Warrant Agreement and asdetailed in the consolidated statements of shareholders’ equity for the fiscal year ended February 1, 2025. Given the non-substantive exercise price of the Warrants in relation to the fair value of the common shares issued upon exercise, the exercise of these Warrants had no impact on net income per common share, both basic and diluted. Upon exercise, the net share settled warrants are included in the Weighted average number of common shares outstanding in the table above for the fiscal year ended February 1, 2025.

17. Share-Based Payment

In conjunction with the initial public offering, on March 9, 2017, the Company established the J.Jill, Inc. Omnibus Equity Incentive Plan, as amended and restated on June 1, 2023 (the “A&R Plan”), which reserves common stock for issuance upon exercise of options, or in respect of granted awards. The A&R Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”). The Board has the authority to determine the type, size and terms and conditions of awards to be granted and to grant such awards.

On June 29, 2023, the Company registered an additional 750,000 shares of its common stock at par value of $0.01 per share. The A&R Plan reserves a maximum of 2,043,453 shares of common stock for issuance upon exercise of options, or in respect of granted awards. As of February 1, 2025, the A&R Plan hadan aggregate of 706,888 shares remaining for future issuance pursuant to awards that may be granted by the Board.

During Fiscal Year 2024, the Board approved and granted restricted stock units (“RSUs”), dividend equivalent RSUs, performance-based restricted stock units (“PSUs”), and dividend equivalent PSUs under the A&R Plan.

Share-based compensation expense for all award types of$6.9 million,$3.8 million, and $3.5 million was recorded in the Selling, general and administrative expenses in the consolidated statement of operations and comprehensive income for Fiscal Years 2024, 2023 and 2022, respectively.

Liability-Classified Stock Options

On December 9, 2024, the Board awarded 100,000 stock options to Elm Street under the 2024 Elm Street Award. The 2024 Elm Street Award vests every two months in three equal installments as Elm Street provides its services over the six-month term and upon Elm Street successfully completing certain performance milestones. The 2024 Elm Street Award expires three years from the date of grant if unexercised. As of February 1, 2025, all 100,000 stock options were outstanding and unvested.

For the 2024 Elm Street Award, no grant date has been established on the stock option award date under Accounting Standards Codification (ASC) 718, Compensation - Stock Compensation, due to the Board retaining sole discretion over the determination of milestone achievement and vesting of each installment of the stock option awards, as provided in the agreement. As a result, the Company applied variable accounting and is recognizing stock-based compensation expense over requisite service period with liability classification, which the Company remeasures at each reporting date and includes in Accrued expenses and other current liabilities until such grant date is achieved. For Fiscal Year 2024, the Company recorded compensation expense of $0.4 million related to the 2024 Elm Street Award in Selling, general and administrative expenses. Refer to Note 19. Subsequent Events for additional details.

The fair value of the performance-based stock options as of February 1, 2025 was estimated using the Black-Scholes option-pricing model with the following assumptions:

As of February 1, 2025, the outstanding stock options have a weighted average fair valueof $6.84, weighted average exercise price of$26.63 and a weighted average remaining contractual term of 2.9 years.

Restricted Stock Units

For Fiscal Years 2024, 2023 and 2022, the Board granted RSUs under the A&R Plan, which vest in one to three equal annual installments, beginning one year from the date of grant. Additionally, during Fiscal Year 2024, in order to reward, retain, and further incentivize key personnel, the Board granted RSUs, fifty percent (50%) of which vests beginning one year from the date of grant, and the remaining fifty percent (50%) of which vests in equal amounts (i.e.12.5% of the total RSU grant) on the last day of each quarter, with the first such quarter beginning January 1, 2026 and ending on March 31, 2026.

The grant-date fair value of RSUs is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. In connection with the cash dividend paid on the Company’s common stock and in accordance with the terms of the A&R Plan, participants holding RSUs were credited with dividend equivalent RSUs, which are subject to the same vesting terms as the RSUs. The fair market value of RSUs was determined based on the market price of the Company’s shares on the date of the grant.

The following table summarizes the RSUs award activity, for Fiscal Year 2024:

As of February 1, 2025, there was $6.9 million of total unrecognized compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average service period of 1.7 years. The total fair value of RSUs vested during Fiscal Years 2024, 2023, and 2022 was $3.3 million, $3.6 million, and $3.0 million, respectively.

Performance Stock Units

For Fiscal Years 2024 and 2023, the Company granted PSUs, a portion of which are based on achieving an Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) goal and the remaining portion is based on achieving an annualized absolute total shareholder return (“TSR”) growth goal.

Each PSU award reflects a target number of shares (“Target Shares”) that may be issued to the award recipient provided the employee continues to provide services to the Company throughout the three year performance period of the award. For Adjusted EBITDA based PSUs, the number of units earned will be determined based on the achievement of the predetermined Adjusted EBITDA goals at the end of each performance year, and for TSR based PSUs, the number of units earned will be determined based on the achievement of the predetermined TSR growth goal at the end of the performance period. The TSR is based on J.Jill’s 30-trading day average beginning and closing price of thethree-year performance period, assuming the reinvestment of dividends. Depending on the performance results based on Adjusted EBITDA and TSR, the actual number of shares that a grant recipient receives at the end of the vesting period may range from 0% to 200% of the Target Shares granted. PSUs are converted into shares of common stock upon vesting, under the terms of the A&R Plan. In connection with the cash dividend paid on the Company’s common stock and in accordance with the terms of the A&R Plan, participants holding PSUs were credited with dividend equivalent PSUs, a portion of which are based on an Adjusted EBITDA goal and the remaining portion is based on achieving an annualized TSR growth goal, each subject to the same vesting terms as the corresponding PSUs.

The fair value of the PSUsfor which the performance is based on an Adjusted EBITDA goal was determined based on the market price of the Company’s shares on the date of the grant. Additionally, for those awards whose performance is based on a TSR growth goal, the fair value was estimated on the grant date using a Monte Carlo simulation as of the grant date. This valuation was performed prior to any declaration of cash dividends and the issuance of dividend equivalent PSUs. Except for the dividend equivalent PSUs, no additional PSUs were granted following this fair valuation, which is based on the assumptions noted below:

The Company recognizes share-based compensation expense related to Adjusted EBITDA based PSUs based on the Company’s estimate of the percentage of the award that will be achieved. The Company evaluates the estimate of these awards on a quarterly basis and adjusts equity-based compensation expense related to these awards, as appropriate. For the TSR based PSUs, the equity-based compensation expense is recognized on a straight-line basis over thethree-year performance period based on the grant-date fair value of these PSUs.

The following table summarizes the PSU awards activity for Fiscal Year 2024:

As of February 1, 2025, there was $4.3 million of total unrecognized compensation expense related to unvested PSUs, which is expected to be recognized over a weighted-average service period of 1.7 years.

Equity-classified Options

During Fiscal Years 2018 and 2017, the Committee granted stock options under the A&R Plan. Stock options are granted to purchase ordinary shares at prices as determined by the Board, but in no event shall the exercise price be less than the fair market value of the common stock at the time of grant. Options generally vest in equal installments over afour-year period. Options expire not more than 10 years from the date of grant. The grant date fair value of options is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Forfeitures are recorded as incurred.

As of February 1, 2025, there wasno unrecognized compensation cost related to stock options as all options were fully vested. During Fiscal Year 2024, the Company forfeited 10,909 stock options. The Company didnot grant or exercise any stock options during Fiscal Year 2024. As of February 1, 2025, the outstanding and exercisable stock options have a weighted average grant date fair value of$30.17, weighted average exercise price of $59.85 and a weighted average remaining contractual term of 2.3 years.

Employee Stock Purchase Plan (the “Purchase Plan”)

The Company established the Purchase Plan during Fiscal Year 2017, under which a maximum of 40,000 shares of common stock may be purchased by eligible employees as defined by the Purchase Plan. As of February 1, 2025, February 3, 2024 and January 28, 2023, there were 2,344 shares authorized and available for future issuance under the Purchase Plan. As of February 1, 2025, the Purchase Plan remains suspended due to an inadequate number of authorized and available shares.

18. Related Party Transactions

On June 14, 2024, the Company, and TowerBrook, as the Selling Stockholder, completed the Equity Offering, which resulted in the dilution of TowerBrook’s ownership and voting power in the Company. As a result, TowerBrook no longer controls a majority of the voting power of the Company’s outstanding voting stock and, therefore, the Company no longer qualifies as a “controlled company” within the meaning of the New York Stock Exchange corporate governance standards. Despite this change, TowerBrook remains an affiliated entity of the Company.

On December 9, 2024, the Company entered into a Consulting Agreement with Elm St Advisors, LLC (“Elm Street”). Elm Street is owned by Jim Scully, who served as a director on the Company’s Board until June 2024. Pursuant to the terms of the Consulting Agreement, Elm Street will assist the Company in developing enhanced operational strategies with a focus on growth opportunities. Total consideration for the services consists of cash of $2 million and up to 100,000 performance-based stock options to purchase the Company’s Common Stock, subject to vesting during the term of the Consulting Agreement upon the achievement of certain specified milestones. Refer to Note 17. Share-Based Payment for additional information on the stock options awarded to Elm Street.

During Fiscal Year 2024 the Company paid Elm Street a one time non-refundable upfront fee of $0.2 million in December 2024, which was recorded to Prepaid expenses and other current assets on the consolidated balance sheet and is being amortized over the term of the Consulting Agreement, which terminates on June 9, 2025. Additionally, as of February 1, 2025, the Company paid a monthly installment payment of $0.3 million as per the terms of the Consulting Agreement. Refer to Note 19. Subsequent Events for additional details.

The Company was party to the Subordinated Credit Agreement, with a group of lenders that includes certain affiliates of TowerBrook and the Chairman of our Board, until it was repaid in full on April 5, 2023. Refer to Note 9. Debt for additional information on repayment of the Subordinated Facility.

In the consolidated statements of operations and comprehensive income, in association with the Subordinated Facility, the Company incurred $1.1 million and $4.1 million of Interest expense – related party during Fiscal Years 2023 and 2022, respectively. The Company didnot incur Interest expense – related party during Fiscal Year 2024.

For Fiscal Year 2024, the Company incurred $0.1 million in third-party expenses, primarily related to the payment of legal and professional fees associated with TowerBrook’s sale of the Company’s common stock in connection with the Equity Offering. During the Fiscal Years 2024, 2023 and 2022, the Company incurred an immaterial amount of other related party transactions.

19. Subsequent Events

On February 27, 2025, the Company announced the appointment of Mary Ellen Coyne as Chief Executive Officer ("CEO") and President, effective May 1, 2025. In addition to her role as CEO and President, Coyne will join the Board of Directors. CEO Claire Spofford, who announced her retirement in December, will step down on April 30, 2025.

On March 11, 2025, the Board declared a cash dividend of $0.08 per share, payable on April 16, 2025 to stockholders of record of issued and outstanding shares of the Company’s common stock as of April 2, 2025.

On March 11, 2025, the Company entered into Amendment No. 1 (“Amendment”) to the Consulting Agreement with Elm St Advisors, LLC (“Elm Street”). The Amendment extended the term of the agreement from June 2025 to November 2025 and changed the consideration to be paid for the services. The total cash consideration remains unchanged; however, the payment period was extended to the end of the new term. In addition, the number of stock options awarded was reduced from 100,000 to 33,334. All other terms and conditions remain in effect.