Tilly’s, Inc. (NYSE: TLYS, the "Company") today announced
financial results for the third quarter of fiscal 2022 ended
October 29, 2022.
"Our third quarter performance was better than we expected and
we entered the fourth quarter with reduced inventory per square
foot compared to last year," commented Ed Thomas, President and
Chief Executive Officer. "Although our November comparable net
sales results were weaker than we expected, we saw an improved
relative trend during the Black Friday weekend compared to earlier
in the month. We are being cautious in our expectations for the
fourth quarter, but believe we have the strategies in place to
achieve improved performance in fiscal 2023."
Operating Results Overview
It should be noted that the Company's operating results for the
comparative periods last year were fueled by unprecedented pent-up
consumer demand and the impact of stimulus payments resulting from
the pandemic, producing Company-record results for net sales, gross
margin, operating income and earnings per share for the third
quarter and first thirty-nine weeks of fiscal 2021.
Fiscal 2022 Third Quarter Operating
Results Overview
The following comparisons refer to the Company's operating
results for the third quarter of fiscal 2022 ended October 29, 2022
versus the third quarter of fiscal 2021 ended October 30, 2021.
- Total net sales were $177.8 million, a decrease of $28.2
million or 13.7%, compared to $206.1 million last year. Total
comparable net sales, including both physical stores and e-commerce
("e-com"), decreased by 14.9%.
- Net sales from physical stores were $141.5 million, a decrease
of $23.7 million or 14.4%, compared to $165.3 million last year
with a comparable store net sales decrease of 15.8%. Net sales from
physical stores represented 79.6% of total net sales compared to
80.2% of total net sales last year. The Company ended the third
quarter with 247 total stores compared to 243 total stores at the
end of the third quarter last year.
- Net sales from e-com were $36.3 million, a decrease of $4.5
million or 11.1%, compared to $40.8 million last year. E-com net
sales represented 20.4% of total net sales compared to 19.8% of
total net sales last year.
- Gross profit, including buying, distribution, and occupancy
costs, was $54.6 million, or 30.7% of net sales, compared to $76.7
million, or 37.2% of net sales, last year. Buying, distribution and
occupancy costs deleveraged by 360 basis points collectively due to
carrying these costs against a significantly lower level of net
sales this year. Product margins declined by 300 basis points
primarily due to an increased markdown rate compared to last year,
during which we experienced record full price selling with an
abnormally low markdown rate.
- Selling, general and administrative ("SG&A") expenses were
$48.3 million, or 27.1% of net sales, compared to $47.7 million, or
23.2% of net sales, last year. The increase in SG&A dollars was
primarily attributable to the impact of wage inflation on store and
corporate payroll expenses as well as operating 4 net additional
stores compared to last year.
- Operating income was $6.3 million, or 3.6% of net sales,
compared to $29.0 million, or 14.1% of net sales, last year, due to
the combined impact of the factors noted above.
- Income tax expense was $1.8 million, or 26.3% of pre-tax
income, compared to $8.2 million, or 28.1% of pre-tax income, last
year.
- Net income was $5.1 million, or $0.17 per diluted share,
compared to $20.8 million, or $0.66 per diluted share, last year.
Weighted average diluted shares were 30.0 million this year
compared to 31.4 million last year.
Fiscal 2022 Year-to-Date Operating Results
Overview
The following comparisons refer to the Company's operating
results for the first thirty-nine weeks of fiscal 2022 ended
October 29, 2022 versus the first thirty-nine weeks of fiscal 2021
ended October 30, 2021.
- Total net sales were $491.9 million, a decrease of $79.3
million or 13.9%, compared to $571.2 million last year. Total
comparable net sales, including both physical stores and e-com,
decreased by 14.9%.
- Net sales from physical stores were $396.1 million, a decrease
of $61.4 million or 13.4%, compared to $457.6 million last year
with a comparable store net sales decrease of 14.7%. Net sales from
stores represented 80.5% of total net sales compared to 80.1% of
total net sales last year.
- Net sales from e-com were $95.8 million, a decrease of $17.8
million or 15.7%, compared to $113.6 million last year. E-com net
sales represented 19.5% of total net sales compared to 19.9% of
total net sales last year.
- Gross profit including buying, distribution, and occupancy
costs, was $150.4 million, or 30.6% of net sales, compared to
$206.3 million, or 36.1% of net sales, last year. Buying,
distribution and occupancy costs deleveraged by 300 basis points
collectively despite being $0.9 million lower than last year due to
carrying these costs against a significantly lower level of net
sales this year. Product margins declined by 250 basis points
primarily due to an increased markdown rate compared to last year,
during which we experienced record full price selling with an
abnormally low markdown rate.
- SG&A expenses were $137.8 million, or 28.0% of net sales,
compared to $136.0 million, or 23.8% of net sales, last year. The
increase in SG&A dollars was primarily attributable to the
impact of wage inflation on store payroll and operating 4 net
additional stores compared to last year, as well as increased
software as a service cost.
- Operating income was $12.6 million, or 2.6% of net sales,
compared to $70.3 million, or 12.3% of net sales, last year.
- Income tax expense was $3.7 million, or 27.2% of pre-tax
income, compared to $17.9 million, or 25.5% of pre-tax income, last
year.
- Net income was $9.8 million, or $0.32 per diluted share,
compared to $52.2 million, or $1.68 per diluted share, last year.
Weighted average diluted shares were 30.4 million this year
compared to 31.0 million last year.
Balance Sheet and Liquidity
As of October 29, 2022, the Company had $105.8 million of cash
and marketable securities and no debt outstanding compared to
$155.6 million and no debt outstanding at the end of the third
quarter last year. Since the end of last year's third quarter, the
Company paid cash dividends to stockholders of $30.9 million in
December 2021 and repurchased 1,258,330 shares of its common stock
for a total of $10.9 million pursuant to its previously-announced
stock repurchase program.
The Company ended the third quarter with inventories per square
foot down 6.9% compared to last year, a significant improvement
from being up 4.1% relative to last year at the end of this year's
second quarter.
Total year-to-date capital expenditures at the end of the third
quarter were $11.9 million this year compared to $10.9 million last
year. For fiscal 2022 as a whole, the Company expects its total
capital expenditures to be approximately $19 million inclusive of
11 new store openings.
Fiscal 2022 Fourth Quarter Outlook
Total comparable net sales through November 29, 2022, including
both physical stores and e-com, decreased by 18.5% relative to the
comparable period last year. For Thanksgiving weekend, Thursday
through Cyber Monday, total comparable net sales decreased by 13.4%
compared to last year. Based on these results, current and
historical trends, and anticipating that fourth quarter sales
performance will revert to a more traditional holiday cadence,
including being the largest sales quarter of the year, the Company
currently estimates that its fiscal 2022 fourth quarter net sales
will be in the range of approximately $183 million to $188 million.
The Company currently expects SG&A expenses to be in the range
of approximately $54 million to $55 million, pre-tax income to be
in the range of approximately $0.8 million to $2.6 million, and
estimated income tax rate to be approximately 27%. The Company
currently expects its earnings per diluted share to be in the range
of $0.02 to $0.06 based on estimated weighted average diluted
shares of approximately 29.9 million. This compares to $204.5
million in net sales and $0.38 in earnings per diluted share for
the fourth quarter of last year.
The current business environment remains subject to many
unpredictable risks and uncertainties including with respect to,
among others, the current inflationary environment, continuing
supply chain difficulties, labor challenges, the COVID-19 pandemic,
geopolitical concerns, and how consumer behavior may change
relative to any of these factors as well as last year's historical
anomalies of pent-up demand coming out of pandemic-related
restrictions and federal stimulus payments. As a result, the
Company's estimates concerning its projected business performance
may change at any time and there can be no guarantee that the
Company's current estimates will be accurate.
Fiscal 2023 Capital Expenditure Plans
The Company currently expects its total capital expenditures for
fiscal 2023 not to exceed $25 million, inclusive of up to 15 new
stores and upgrades to certain distribution and information
technology systems.
Conference Call Information
A conference call to discuss these financial results is
scheduled for today, December 1, 2022, 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). 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 December 8, 2022, by dialing (844) 512-2921
(domestic) or (412) 317-6671 (international) and entering the
conference identification number: 13734299.
About Tillys
Tillys is a leading, destination specialty retailer of casual
apparel, footwear, accessories and hardgoods 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 249 total stores across 33 states, as well as
its website, www.tillys.com.
Forward-Looking Statements
Certain statements in this press release are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. In particular, statements regarding the overall
effect of the novel coronavirus (COVID-19) pandemic, including its
impacts on us, our operations, or our future financial condition or
operating results, our current operating expectations in light of
historical results, expectations regarding customer traffic, our
supply chain, and inflation, our ability to properly manage our
inventory levels, and any other statements about our future cash
position, financial flexibility, 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, the
effects of the COVID-19 pandemic (including any surges in the
number of cases related thereto, or other weather, epidemics,
pandemics, or other public health issues), supply chain
difficulties, and inflation on our business and operations, and our
ability to respond thereto, 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, attract talented employees, enhance awareness of our
brand and brand image, general consumer spending patterns and
levels, the markets generally, our ability to satisfy our financial
obligations, including under our credit facility and our leases,
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 on the SEC’s
website at www.sec.gov and on 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)
October 29,
2022
January 29,
2022
October 30,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
75,786
$
42,201
$
59,392
Marketable securities
29,985
97,027
96,237
Receivables
11,352
6,705
8,881
Merchandise inventories
81,589
65,645
86,692
Prepaid expenses and other current
assets
16,036
16,400
9,682
Total current assets
214,748
227,978
260,884
Operating lease assets
222,664
216,508
226,547
Property and equipment, net
51,279
47,530
49,392
Deferred tax assets
10,261
11,446
11,894
Other assets
1,488
1,361
1,520
TOTAL ASSETS
$
500,440
$
504,823
$
550,237
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
30,225
$
28,144
$
46,378
Accrued expenses
17,239
19,073
20,084
Deferred revenue
13,859
17,096
13,568
Accrued compensation and benefits
9,756
17,056
17,106
Current portion of operating lease
liabilities
50,047
51,504
51,717
Current portion of operating lease
liabilities, related party
2,771
2,533
2,582
Other liabilities
806
761
727
Total current liabilities
124,703
136,167
152,162
Long-term liabilities:
Noncurrent portion of operating lease
liabilities
176,621
171,965
182,700
Noncurrent portion of operating lease
liabilities, related party
23,129
21,000
21,625
Other liabilities
455
978
1,112
Total long-term liabilities
200,205
193,943
205,437
Total liabilities
324,908
330,110
357,599
Stockholders’ equity:
Common stock (Class A)
23
24
24
Common stock (Class B)
7
7
7
Preferred stock
—
—
—
Additional paid-in capital
168,749
166,929
165,983
Retained earnings
6,634
7,754
26,616
Accumulated other comprehensive income
(loss)
119
(1
)
8
Total stockholders’ equity
175,532
174,713
192,638
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
500,440
$
504,823
$
550,237
Tilly’s, Inc.
Consolidated Statements of Income (In thousands, except per
share data) (unaudited)
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
October 29, 2022
October 30, 2021
October 29, 2022
October 30, 2021
Net sales
$
177,847
$
206,096
$
491,930
$
571,205
Cost of goods sold (includes buying,
distribution, and occupancy costs)
122,346
128,612
338,870
362,751
Rent expense, related party
918
745
2,680
2,149
Total cost of goods sold (includes
buying, distribution, and occupancy costs)
123,264
129,357
341,550
364,900
Gross profit
54,583
76,739
150,380
206,305
Selling, general and administrative
expenses
48,134
47,609
137,405
135,607
Rent expense, related party
134
133
400
400
Total selling, general and
administrative expenses
48,268
47,742
137,805
136,007
Operating income
6,315
28,997
12,575
70,298
Other income (expense), net
675
(1
)
862
(219
)
Income before income taxes
6,990
28,996
13,437
70,079
Income tax expense
1,841
8,162
3,656
17,888
Net income
$
5,149
$
20,834
$
9,781
$
52,191
Basic earnings per share of Class A and
Class B common stock
$
0.17
$
0.67
$
0.32
$
1.72
Diluted earnings per share of Class A and
Class B common stock
$
0.17
$
0.66
$
0.32
$
1.68
Weighted average basic shares
outstanding
29,894
30,915
30,226
30,429
Weighted average diluted shares
outstanding
30,050
31,352
30,428
31,016
Tilly’s, Inc.
Consolidated Statements of Cash Flows (In thousands)
(unaudited)
Thirty-Nine Weeks
Ended
October 29,
2022
October 30,
2021
Cash flows from operating
activities
Net income
$
9,781
$
52,191
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization
10,515
13,123
Insurance proceeds from casualty loss
—
117
Stock-based compensation expense
1,764
1,417
Impairment of assets
14
136
Loss on disposal of assets
64
52
Gain on sales and maturities of marketable
securities
(230
)
(101
)
Deferred income taxes
1,167
57
Changes in operating assets and
liabilities:
Receivables
(705
)
1,847
Merchandise inventories
(15,944
)
(31,111
)
Prepaid expenses and other assets
557
(3,698
)
Accounts payable
2,068
21,402
Accrued expenses
(4,253
)
(9,804
)
Accrued compensation and benefits
(7,300
)
7,207
Operating lease liabilities
(4,637
)
(5,205
)
Deferred revenue
(3,237
)
76
Other liabilities
(706
)
(856
)
Net cash (used in) provided by
operating activities
(11,082
)
46,850
Cash flows from investing
activities
Proceeds from maturities of marketable
securities
117,189
95,224
Purchases of marketable securities
(49,779
)
(126,420
)
Purchases of property and equipment
(11,897
)
(10,911
)
Proceeds from sale of property and
equipment
—
17
Insurance proceeds from casualty loss
—
29
Net cash provided by (used in)
investing activities
55,513
(42,061
)
Cash flows from financing
activities
Share repurchases related to share
repurchase program
(10,902
)
—
Proceeds from exercise of stock
options
56
9,129
Dividends paid
—
(30,710
)
Net cash used in financing
activities
(10,846
)
(21,581
)
Change in cash and cash
equivalents
33,585
(16,792
)
Cash and cash equivalents, beginning of
period
42,201
76,184
Cash and cash equivalents, end of
period
$
75,786
$
59,392
Tilly's, Inc. Store
Count and Square Footage
Store Count at
Beginning of Quarter
New Stores Opened
During Quarter
Stores Permanently
Closed During Quarter
Store Count at End of
Quarter
Total Gross Square
Footage End of Quarter (in thousands)
2021 Q1
238
2
2
238
1,753
2021 Q2
238
6
—
244
1,788
2021 Q3
244
—
1
243
1,781
2021 Q4
243
1
3
241
1,764
2022 Q1
241
—
—
241
1,764
2022 Q2
241
2
1
242
1,767
2022 Q3
242
5
—
247
1,800
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221201005877/en/
Investor Relations: Michael Henry,
Executive Vice President, Chief Financial Officer (949) 609-5599,
ext. 17000 irelations@tillys.com
Tillys (NYSE:TLYS)
Historical Stock Chart
From May 2023 to Jun 2023
Tillys (NYSE:TLYS)
Historical Stock Chart
From Jun 2022 to Jun 2023
