Up 76% This Month, Will J.Jill Continue To March Higher?

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Massachusetts-based women’s apparel seller J.Jill (JILL) has been trying to climb out of its COVID-19 pandemic business hole and its stock saw a nice pop recently. The question is, will the resurgence of COVID-19 cases undermine its recovery?

Founded in 1959, J.Jill, Inc. (JILL - Get Rating) is an omnichannel retailer of women’s apparel that operates under the J.Jill brand name in the United States. Given its sequential topline improvement in its last fiscal quarter compared its prior quarter, the stock has gained 66.6% over the past month to close yesterday’s trading session at $8.38. However, JILL is  still struggling to withstand unprecedented challenges in the retail sector caused by the COVID-19 pandemic.

Despite reducing its interest expenses, JILL reported a significant operating loss and declining revenue for the last quarter. In fact, JILL closed nine of its stores in the fourth quarter of its fiscal 2020, closing the quarter with 267 stores. The store closures could well throttle JILL’s growth in the coming months.

While the company plans to revamp its operating model to return to profitability  and improve its cash balance in the long run, the weakness in its current financials might dampen the stock’s performance in the near term.

Here’s what we think could influence JILL’s performance in the near term:

Resurgence of COVID-19 Cases Makes the Prospects Uncertain

Although the nationwide COVID-19  vaccine roll out has raised retailers’ hopes of a near-term return to normal business activity,  a  recent surge in coronavirus cases in 21 states could aggravate the strain on the retail sector. It could extend operational restrictions and, in some cases, cause more  store closures. So, the current scenario for the retail landscape remains uncertain. JILL closed nine stores in its  last reported quarters and  is  struggling to stay afloat.

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