TLYS
$4.49
Tilly's
$.12
2.75%
Earnings Details
Quarter January 2020
Thursday, March 12, 2020 4:05:00 PM
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Summary

Tilly's Reports In-line

Tilly's (TLYS) reported Quarter January 2020 earnings of $0.21 per share on revenue of $172.5 million. The consensus earnings estimate was $0.20 per share on revenue of $172.6 million. The Earnings Whisper number was $0.21 per share. Revenue grew 1.1% on a year-over-year basis.

Tilly' Inc is a growing destination specialty retailer of action sports inspired apparel, footwear and accessories. Its registered trademarks include Ambitious, Blue Crown, Division 7 and Eldon.

Results
Reported Earnings
$0.21
Earnings Whisper
$0.21
Consensus Estimate
$0.20
Reported Revenue
$172.5 Mil
Revenue Estimate
$172.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Tilly's, Inc. Announces Fiscal 2019 Fourth Quarter and Full Year Results

IRVINE, Calif.--(BUSINESS WIRE)--Tilly’s, Inc. (NYSE:TLYS, the "Company") today announced financial results for the fourth quarter and full year of fiscal 2019 ended February 1, 2020.

"A deeper than expected drop in store traffic and comparable store net sales during the second and third weeks of December resulted in a disappointing fourth quarter overall, which was our first negative comp quarter in over three and a half years," commented Ed Thomas, President and Chief Executive Officer. "Comparable store net sales are off to a positive start thus far in the first quarter of fiscal 2020. However, due to the uncertainty of the potential near-term impacts of the coronavirus situation, we are unable to provide specific earnings guidance at this time."

Fourth Quarter Results Overview

The following comparisons refer to operating results for the fourth quarter of fiscal 2019 versus the fourth quarter of fiscal 2018 ended February 2, 2019:

  • Total net sales were $172.5 million, an increase of $1.9 million or 1.1%, compared to $170.6 million last year. The Company ended the quarter with 240 total stores, including one RSQ-branded pop-up store, compared to 229 total stores, including four RSQ-branded pop-up stores, last year.
  • Comparable store net sales, which includes e-commerce net sales, decreased 2.0% compared to last year's increase of 6.4%. Comparable store net sales in physical stores decreased 2.2% and represented approximately 80.7% of total net sales, compared to a decrease of 0.9% and an 80.3% share of total net sales last year. E-commerce net sales decreased 1.2% and represented approximately 19.3% of total net sales, compared to an increase of 49.6% and a 19.7% share of total net sales last year.
  • Gross profit was $52.1 million, or 30.2% of net sales, compared to $52.2 million, or 30.6% of net sales last year. Product margins decreased 20 basis points as a percentage of net sales due to increased markdowns. Occupancy costs deleveraged 70 basis points as a percentage of net sales, primarily due to opening 11 net new stores compared to last year and the negative comparable store net sales result. Distribution costs improved 50 basis points primarily due to lower e-commerce shipping charges compared to last year.
  • Selling, general and administrative expenses ("SG&A") were $43.6 million, or 25.3% of net sales, compared to $41.2 million, or 24.2% of net sales, last year. The $2.4 million increase in SG&A was primarily due to higher store payroll expenses of approximately $1.5 million resulting from minimum wage increases and store count growth, higher worker's compensation claims reserves of $0.8 million, and higher marketing expenses of approximately $0.4 million primarily relating to e-commerce. These expense increases were partially offset by lower corporate bonus provisions of $1.2 million compared to last year. Last year's SG&A also included $0.9 million in expense reductions related to negotiated resolutions of certain vendor disputes.
  • Operating income was $8.5 million, or 4.9% of net sales, compared to $10.9 million, or 6.4% of net sales, last year. The $2.4 million decrease in operating income was primarily due to the net SG&A increase noted above relative to net sales growth noted above.
  • Income tax expense was $2.8 million, or 30.9% of pre-tax income, compared to $3.1 million, or 26.4% of pre-tax income, last year. Income tax expense for fiscal 2019 includes approximately $0.5 million of discrete items related to the acceleration and expiration of certain employee stock options.
  • Net income was $6.3 million, or $0.21 per diluted share, compared to $8.7 million, or $0.29 per diluted share, last year.

Year-to-Date Results Overview

The following comparisons refer to operating results for the fifty-two weeks of fiscal 2019 versus the fifty-two weeks of fiscal 2018:

  • Total net sales were $619.3 million, an increase of $20.8 million or 3.5%, compared to $598.5 million last year.
  • Comparable store net sales, which includes e-commerce net sales, increased 0.8% compared to last year's increase of 4.0%. E-commerce net sales increased 9.7% and represented approximately 15.9% of total net sales compared to an increase of 21.7% and a 15% share of total net sales last year. Comparable store net sales in physical stores decreased 0.7% and represented approximately 84.1% of total net sales compared to an increase of 1.4% and a 85% share of last year's total net sales.
  • Gross profit was $186.7 million, an increase of $5.8 million or 3.2%, compared to $180.9 million last year. Gross margin, or gross profit as a percentage of net sales, slightly decreased to 30.1% from 30.2% last year. Product margins were flat compared to last year. Occupancy costs deleveraged 10 basis points primarily due to opening 11 net new stores.
  • SG&A was $158.3 million, or 25.6% of net sales, compared to $149.4 million, or 25.0% of net sales, last year. The $8.8 million increase in SG&A was primarily due to higher store payroll expenses of approximately $3.7 million resulting from minimum wage increases and store count growth, higher marketing expenses of approximately $2.6 million primarily due to e-commerce net sales growth, increased temporary labor expenses of approximately $1.5 million, and higher worker's compensation claims reserves of approximately $0.9 million. These increases were partially offset by a $2.4 million reduction in bonus expenses. Last year's SG&A also included a $1.5 million credit for the favorable resolution of a legal matter and $0.9 million in expense reductions related to negotiated resolutions of certain vendor disputes, which were partially offset by $0.7 million in secondary offering expenses.
  • Operating income was $28.5 million, or 4.6% of net sales, compared to $31.5 million, or 5.3% of net sales, last year. The $3.0 million decrease in operating income was primarily due to the net SG&A increase relative to the net sales increase noted above.
  • Income tax expense was $8.7 million, or 27.9% of pre-tax income, compared to $8.9 million, or 26.2% of pre-tax income, last year. Income tax expense for fiscal 2019 includes approximately $0.5 million of discrete items related to the acceleration and expiration of certain employee stock options.
  • Net income was $22.6 million, or $0.76 per diluted share, compared to $24.9 million, or $0.84 per diluted share, last year. Of the $0.08 decline in year-over-year earnings per diluted share, approximately $0.04 was attributable to the aggregate non-recurring impact of last year's favorable legal matter resolution, negotiated expense reductions and secondary offering costs, in each case noted above. The remaining $0.04 was attributable to the net SG&A increase noted above relative to net sales growth during fiscal 2019.

Balance Sheet and Liquidity

As of February 1, 2020, the Company had $139.9 million of cash and marketable securities and no debt outstanding under its revolving credit facility. This compares to $144.1 million of cash and marketable securities and no debt outstanding under its revolving credit facility as of February 2, 2019. For the fourth consecutive year, the Company paid a special cash dividend to its stockholders in February 2020. This year's special cash dividend was approximately $29.7 million in the aggregate, or $1 per share.

Fiscal 2020 First Quarter Outlook

Through March 10, 2020, total comparable store net sales, including e-commerce, have increased by a low single-digit percentage with comparable store net sales in stores slightly negative and e-commerce net sales up high single-digits on a percentage basis. Given the unpredictability of the effects of the coronavirus on, among other things, consumer behavior, store traffic, production capabilities, timing of deliveries, our people, economic activity and the market generally in the coming weeks and months, the Company is unable to provide specific earnings guidance at this time.

Conference Call Information

A conference call to discuss these financial results is scheduled for today, March 12, 2020, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to dial (877) 407-4018 (domestic) or (201) 689-8471 (international) at 4:25 p.m. ET (1:25 p.m. PT). The conference call will also be available to interested parties through a live webcast at www.tillys.com. Please visit the website and select the “Investor Relations” link at least 15 minutes prior to the start of the call to register and download any necessary software.

A telephone replay of the call will be available until March 26, 2020, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13699476. Please note participants must enter the conference identification number in order to access the replay.

About Tillys

Tillys is a leading, destination specialty retailer of casual apparel, footwear and accessories for young men, young women, boys and girls with an extensive selection of iconic global, emerging, and proprietary brands rooted in an active, outdoor and social lifestyle. Tillys is headquartered in Irvine, California and currently operates 239 total stores, including one RSQ-branded pop-up store, across 33 states, as well as its website, www.tillys.com.

Forward-Looking Statements

Certain statements in this press release and oral statements made from time to time by our representatives are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements regarding the potential near-term impacts of the coronavirus situation, our future financial and operating results, including but not limited to future comparable store sales, future operating income, future net income, future earnings per share, future gross, operating or product margins, anticipated tax rate, future inventory levels, and market share and our business and strategy, including but not limited to expected store openings and closings, expansion of brands and exclusive relationships, development and growth of our e-commerce platform and business, promotional strategy, and any other statements about our future expectations, plans, intentions, beliefs or prospects expressed by management are forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs, but they involve a number of risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including, but not limited to, our ability to respond to changing customer preferences and trends, attract customer traffic at our stores and online, execute our growth and long-term strategies, expand into new markets, grow our e-commerce business, effectively manage our inventory and costs, effectively compete with other retailers, enhance awareness of our brand and brand image, general consumer spending patterns and levels, the effect of weather, epidemics, pandemics, or other public health issues, and other factors that are detailed in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”), including those detailed in the section titled “Risk Factors” and in our other filings with the SEC, which are available from the SEC’s website at www.sec.gov and from our website at www.tillys.com under the heading “Investor Relations”. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. This release should be read in conjunction with our financial statements and notes thereto contained in our Form 10-K.

Tilly’s, Inc.

Consolidated Balance Sheets

(In thousands, except par value)

(unaudited)

  

 

 

February 1,
2020

 

February 2,
2019

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

70,137

 

 

$

68,160

 

Marketable securities

 

69,780

 

 

75,919

 

Receivables

 

7,485

 

 

6,082

 

Merchandise inventories

 

56,901

 

 

55,809

 

Prepaid expenses and other current assets

 

4,561

 

 

11,171

 

Total current assets

 

208,864

 

 

217,141

 

Operating lease assets

 

263,649

 

 

 

Property and equipment, net

 

66,176

 

 

73,842

 

Other assets

 

7,951

 

 

2,185

 

Total assets

 

$

546,640

 

 

$

293,168

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

20,562

 

 

$

24,207

 

Accrued expenses

 

20,755

 

 

18,756

 

Deferred revenue

 

11,761

 

 

10,373

 

Accrued compensation and benefits

 

7,190

 

 

8,930

 

Dividends payable

 

29,677

 

 

29,453

 

Current portion of operating lease liabilities

 

55,321

 

 

 

Current portion of deferred rent

 

 

 

5,540

 

Total current liabilities

 

145,266

 

 

97,259

 

Noncurrent operating lease liabilities

 

240,755

 

 

 

Noncurrent deferred rent

 

 

 

30,825

 

Other

 

718

 

 

1,757

 

Total liabilities

 

386,739

 

 

129,841

 

Stockholders’ equity:

 

 

 

 

Common stock (Class A)

 

22

 

 

21

 

Common stock (Class B)

 

8

 

 

8

 

Preferred stock

 

 

 

 

Additional paid-in capital

 

153,377

 

 

149,737

 

Retained earnings

 

6,280

 

 

13,335

 

Accumulated other comprehensive income

 

214

 

 

226

 

Total stockholders’ equity

 

159,901

 

 

163,327

 

Total liabilities and stockholders’ equity

 

$

546,640

 

 

$

293,168

 

Tilly’s, Inc.

Consolidated Statements of Income

(In thousands, except per share data)

(unaudited)

  

 

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

 

 

February 1,
2020

 

February 2,
2019

 

February 1,
2020

 

February 2,
2019

Net sales

 

$

172,479

 

 

$

170,612

 

 

$

619,300

 

 

$

598,478

 

Cost of goods sold (includes buying, distribution, and occupancy costs)

 

120,345

 

 

118,455

 

 

432,592

 

 

417,582

 

Gross profit

 

52,134

 

 

52,157

 

 

186,708

 

 

180,896

 

Selling, general and administrative expenses

 

43,639

 

 

41,223

 

 

158,253

 

 

149,416

 

Operating income

 

8,495

 

 

10,934

 

 

28,455

 

 

31,480

 

Other income, net

 

589

 

 

856

 

 

2,901

 

 

2,313

 

Income before income taxes

 

9,084

 

 

11,790

 

 

31,356

 

 

33,793

 

Income tax expense

 

2,811

 

 

3,113

 

 

8,734

 

 

8,850

 

Net income

 

$

6,273

 

 

$

8,677

 

 

$

22,622

 

 

$

24,943

 

Basic income per share of Class A and Class B common stock

 

$

0.21

 

 

$

0.29

 

 

$

0.77

 

 

$

0.85

 

Diluted income per share of Class A and Class B common stock

 

$

0.21

 

 

$

0.29

 

 

$

0.76

 

 

$

0.84

 

Weighted average basic shares outstanding

 

29,628

 

 

29,451

 

 

29,533

 

 

29,278

 

Weighted average diluted shares outstanding

 

29,926

 

 

29,836

 

 

29,788

 

 

29,768

 

Tilly’s, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

  

 

 

Fifty-Two Weeks Ended

 

 

February 1,
2020

 

February 2,
2019

Cash flows from operating activities

 

 

 

 

Net income

 

$

22,622

 

 

$

24,943

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

20,948

 

 

22,485

 

Stock-based compensation expense

 

2,136

 

 

2,212

 

Impairment of assets

 

282

 

 

786

 

Loss on disposal of assets

 

908

 

 

30

 

Gain on sales and maturities of marketable securities

 

(1,660

)

 

(1,552

)

Deferred income taxes

 

(5,720

)

 

953

 

Changes in operating assets and liabilities:

 

 

 

 

Receivables

 

3,204

 

 

(1,730

)

Merchandise inventories

 

(1,092

)

 

(2,783

)

Prepaid expenses and other assets

 

557

 

 

(1,641

)

Accounts payable

 

(4,227

)

 

3,195

 

Accrued expenses

 

1,369

 

 

(4,438

)

Accrued compensation and benefits

 

(1,740

)

 

2,811

 

Operating lease liabilities and deferred rent

 

(2,541

)

 

(195

)

Deferred revenue

 

1,388

 

 

1,667

 

Net cash provided by operating activities

 

36,434

 

 

46,743

 

Cash flows from investing activities

 

 

 

 

Purchase of property and equipment

 

(14,299

)

 

(14,923

)

Proceeds from sale of property and equipment

 

 

 

3

 

Purchases of marketable securities

 

(126,526

)

 

(136,198

)

Proceeds from marketable securities

 

134,316

 

 

144,859

 

Net cash used in investing activities

 

(6,509

)

 

(6,259

)

Cash flows from financing activities

 

 

 

 

Dividends paid

 

(29,453

)

 

(29,067

)

Proceeds from exercise of stock options

 

1,590

 

 

3,652

 

Taxes paid in lieu of shares issued for stock-based compensation

 

(85

)

 

(111

)

Net cash used in financing activities

 

(27,948

)

 

(25,526

)

Change in cash and cash equivalents

 

1,977

 

 

14,958

 

Cash and cash equivalents, beginning of period

 

68,160

 

 

53,202

 

Cash and cash equivalents, end of period

 

$

70,137

 

 

$

68,160

 

Tilly's, Inc.

Store Count and Square Footage

  

 

 

Stores
Open at
Beginning of
Quarter

 

Stores
Opened
During Quarter

 

Stores
Closed
During
Quarter

 

Stores
Open at
End of Quarter

 

Total Gross
Square Footage
End of Quarter
(in thousands)

2019 Q1      

 

229

 

1

 

1

 

229

 

1,708

2019 Q2

 

229

 

1

 

1

 

229

 

1,710

2019 Q3

 

229

 

4

 

1

 

232

 

1,732

2019 Q4

 

232

 

8

 

 

240

 

1,776

 

Investor Relations:
Michael Henry, Chief Financial Officer
(949) 609-5599, ext. 17000
irelations@tillys.com

Source: Tilly’s, Inc.