Introduces Fiscal 2017 Second Quarter
Outlook
First Quarter Comp Store Sales, Operating
Results and EPS Exceed Company Outlook
Tilly’s, Inc. (NYSE: TLYS) today announced financial results for
the first quarter (thirteen weeks) of fiscal 2017 ended April 29,
2017.
“We believe our initiatives are gaining traction. After a tough
February, our combined March/April comparable store sales were up
5.3%, resulting in a positive comparable store sales result for the
first quarter as a whole and our fourth consecutive quarter of
year-over-year operating income improvement,” commented Ed Thomas,
President and Chief Executive Officer.
First Quarter Results Overview
The following comparisons refer to operating results for the
first quarter of fiscal 2017 versus the first quarter of fiscal
2016 ended April 30, 2016:
- Total net sales were $120.9 million, an
increase of 0.6% from $120.2 million last year.
- Comparable store sales, which include
e-commerce sales, increased 0.6%. Comparable store sales decreased
4.1% in the first quarter last year.
- Gross margin, or gross profit as a
percentage of net sales, increased to 27.2% from 27.1% last year.
The 10 basis point increase in gross margin was attributable to a
80 basis point reduction in buying, distribution and occupancy
costs, offset by a 70 basis point decline in product margins from
increased markdowns.
- Selling, general and administrative
expenses ("SG&A") were $33.2 million, a decrease of $3.3
million from $36.6 million last year. As a percentage of net sales,
SG&A improved 290 basis points to 27.5% from 30.4% last year.
Last year's SG&A included $2.4 million for the combination of a
legal provision and non-cash store asset impairment charges that
were not repeated this year, which accounted for 200 of the 290
basis point improvement in SG&A this year. The remaining $0.9
million, or 90 basis points, of improvement in SG&A was
primarily attributable to reduced marketing expenses.
- Operating loss was $0.3 million, or
0.3% of net sales, compared to an operating loss of $4.0 million,
or 3.3% of net sales, last year. The 300 basis point improvement in
our operating margin was primarily attributable to the reductions
in SG&A noted above.
- Income tax expense was $0.1 million
compared to an income tax benefit of $1.1 million last year.
Despite our operating loss for the quarter, we incurred income tax
expense due to certain discrete charges related to employee stock
grant activity and required estimated tax payments in certain
states.
- Net loss was $0.2 million, or $0.01 per
share, compared to a net loss of $2.7 million, or $0.10 per share,
last year.
Balance Sheet and Liquidity
As of April 29, 2017, the Company had $105.6 million of cash and
marketable securities and no debt outstanding under its revolving
credit facility. In February 2017, the Company paid a first-ever
special cash dividend to its stockholders of approximately $20.1
million in the aggregate. This compares to $88.4 million of cash
and marketable securities and no debt outstanding as of April 30,
2016.
Fiscal 2017 Second Quarter Outlook
Based on current trends, the Company expects its second quarter
comparable store sales to be in the range of flat to up low
single-digits, operating income to be in the range of $1.2 million
to $3.5 million, and income per diluted share to be in the range of
$0.03 to $0.07. This compares to income per diluted share of $0.05
for the second quarter of fiscal 2016. This assumes an anticipated
effective tax rate of approximately 40% and weighted average shares
of approximately 29 million.
Conference Call Information
A conference call to discuss the financial results is scheduled
for today, May 23, 2017, 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 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 June 6,
2017, by dialing (844) 512-2921 (domestic) or (412) 317-6671
(international) and entering the conference identification number:
13661327. Please note participants must enter the conference
identification number in order to access the replay.
About Tillys
Tillys is a leading destination youth culture specialty retailer
of casual apparel, footwear and accessories for young men, young
women, boys and girls with an extensive assortment of the most
relevant and sought-after brands rooted in the action sports, team
sports, music, art and fashion inherent in the active and outdoor
West Coast lifestyle. Tillys is headquartered in Irvine, California
and currently operates 222 total stores across 31 states and 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 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, 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 and per
share data)
(unaudited)
April 29,2017 January 28,2017
ASSETS Current assets: Cash and cash equivalents $ 52,813 $
78,994 Marketable securities 52,833 54,923 Receivables 4,737 3,989
Merchandise inventories 55,437 47,768 Prepaid expenses and other
current assets 8,513 9,541 Total current assets 174,333
195,215 Property and equipment, net 87,823 89,219 Other assets
6,207 6,072 Total assets $ 268,363 $ 290,506
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable $ 22,842 $ 17,584 Accrued expenses 21,404 23,872
Deferred revenue 9,114 10,203 Accrued compensation and benefits
4,728 7,259 Current portion of deferred rent 5,834 5,643 Current
portion of capital lease obligation 612 835 Total current
liabilities 64,534 65,396 Long-term portion of deferred rent 34,356
35,890 Total liabilities 98,890 101,286 Stockholders’
equity:
Common stock (Class A), $0.001 par value;
April 29, 2017 - 100,000 shares authorized,13,678 shares issued and
outstanding; January 28, 2017 - 100,000 shares authorized,
13,434shares issued and outstanding
14 14
Common stock (Class B), $0.001 par value;
April 29, 2017 - 35,000 shares authorized, 15,109shares issued and
outstanding; January 28, 2017 - 35,000 shares authorized, 15,329
sharesissued and outstanding
15 15
Preferred stock, $0.001 par value; April
29, 2017 and January 28, 2017 - 10,000 sharesauthorized, no shares
issued or outstanding
— — Additional paid-in capital 138,797 138,102 Retained earnings
30,604 51,023 Accumulated other comprehensive income 43 66
Total stockholders’ equity 169,473 189,220 Total liabilities
and stockholders’ equity $ 268,363 $ 290,506
Tilly’s, Inc. Consolidated Statements of
Loss
(In thousands, except per share data)
(unaudited)
Three Months Ended April 29,2017
April 30,2016 Net sales $ 120,947 $ 120,218 Cost of
goods sold (includes buying, distribution, and occupancy costs)
88,042 87,631 Gross profit 32,905 32,587 Selling,
general and administrative expenses 33,234 36,554
Operating loss (329 ) (3,967 ) Other income, net 238 76
Loss before income taxes (91 ) (3,891 ) Income tax
expense/(benefit) 70 (1,146 ) Net loss $ (161 ) $ (2,745 )
Basic loss per share of Class A and Class B common stock $ (0.01 )
$ (0.10 ) Diluted loss per share of Class A and Class B common
stock $ (0.01 ) $ (0.10 ) Weighted average basic shares outstanding
28,705 28,425 Weighted average diluted shares outstanding 28,705
28,425
Tilly’s, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Three Months Ended April 29,2017
April 30,2016 Cash flows from operating
activities Net loss $ (161 ) $ (2,745 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation and amortization 5,829 5,805 Stock-based compensation
expense 577 850 Impairment of assets — 682 Loss on disposal of
assets 4 3 Gain on sales and maturities of marketable securities
(152 ) (51 ) Deferred income taxes (141 ) 29 Changes in operating
assets and liabilities: — Receivables (748 ) (503 ) Merchandise
inventories (7,669 ) (8,362 ) Prepaid expenses and other assets
1,049 (3,134 ) Accounts payable 5,143 5,109 Accrued expenses (3,807
) (1,970 ) Accrued compensation and benefits (2,531 ) (1,536 )
Deferred rent (1,343 ) (851 ) Deferred revenue (1,089 ) (1,308 )
Net cash used in operating activities (5,039 ) (7,982 )
Cash flows from investing activities Purchase of property
and equipment (2,983 ) (4,325 ) Proceeds from sale of property and
equipment — 5 Purchases of marketable securities (29,818 ) (19,943
) Proceeds from marketable securities 32,022 25,000
Net cash (used in) provided by investing activities (779 ) 737
Cash flows from financing activities Dividends paid
(20,080 ) — Proceeds from exercise of stock options 29 — Payment of
capital lease obligation (223 ) (209 ) Taxes paid in lieu of shares
issued for stock-based compensation (89 ) (92 ) Net cash used in
financing activities (20,363 ) (301 ) Change in cash and cash
equivalents (26,181 ) (7,546 ) Cash and cash equivalents, beginning
of period 78,994 51,020 Cash and cash equivalents,
end of period $ 52,813 $ 43,474
Tilly's, Inc. Store Count and Square
Footage Stores
Open at
Beg 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)
2016 Q1 224 — — 224 1,704
2016 Q2 224 2 1 225 1,713
2016 Q3 225 1 1 225 1,716
2016 Q4 225 — 2 223 1,703
2017 Q1 223 — 1 222 1,697
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version on businesswire.com: http://www.businesswire.com/news/home/20170523006076/en/
Investor Relations:Tilly’s,
Inc.Michael Henry, 949-609-5599, ext. 17000Chief Financial
Officerirelations@tillys.com
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