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Tilly’s, Inc. Announces First Quarter Fiscal 2016 Results
Introduces Second Quarter Fiscal 2016 Outlook
First Quarter Net Sales Flat at
First Quarter GAAP Net Loss per Share of
“Our first quarter results were at the better end of our outlook range
before taking a legal provision into account, and we managed inventory
well with a 7% decrease on a per square foot basis," stated
Fiscal 2016 First Quarter Results Overview
The following comparisons refer to operating results for the first
quarter of fiscal 2016 versus the first quarter of fiscal 2015 ended
-
Total net sales were
$120.2 million , flat to last year. - Comparable store sales, which include e-commerce sales, decreased 4.1%.
-
Gross profit was
$32.6 million , a 9.6% decrease from$36.1 million last year. Gross margin, or gross profit as a percentage of net sales, was 27.1% compared to 30.0% last year. This 290 basis point decrease in gross margin was attributable to three factors: 1) occupancy costs deleveraged 170 basis points due to the negative sales comp and adding 11 net new stores year over year; 2) product margins remained strong but declined 90 basis points as a result of increased markdowns; and 3) distribution costs deleveraged 30 basis points on the negative sales comp, primarily due to increased shipping costs associated with the growth of e-commerce. -
Selling, general and administrative expenses ("SG&A") were
$36.6 million , up$2.7 million from$33.9 million last year. Of this increase,$2.4 million was attributable to the combination of a legal provision and non-cash store asset impairment charges. Excluding these items, SG&A increased less than$0.3 million , primarily due to increased store payroll dollars associated with 11 net new stores and minimum wage increases, which offset expense reductions in other areas. -
Operating loss was
$4.0 million , or 3.3% of net sales, compared to operating income of$2.1 million , or 1.8% of net sales, last year. The 510 basis point decrease in our operating results was primarily attributable to lower gross profit and increased SG&A as noted above. -
Income tax benefit was
$1.1 million , or 29.5% of pre-tax loss, compared to income tax expense of$0.9 million , or 40.0% of pre-tax income, last year. This tax rate change was attributable to a$0.4 million discrete income tax impact related to restricted stock vesting during the first quarter of fiscal 2016. -
Net loss was
$2.7 million , or$0.10 per share, compared to net income of$1.3 million , or$0.05 per share, last year. On a non-GAAP basis, excluding a tax-effected$1.0 million legal provision, net loss was$1.7 million , or$0.06 per share.
Balance Sheet and Liquidity
As of
Second Quarter 2016 Outlook
The Company expects second quarter comparable store sales to be in the
range of flat to -4%, operating results to be in the range from
break-even to a net loss of
Non-GAAP Financial Measures
In addition to reporting financial measures in accordance with
accounting principles generally accepted in
For a description of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see the accompanying table titled “Supplemental Information - Consolidated Statements of (Loss) Income; Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures” contained in this press release.
Conference Call Information
A conference call to discuss the financial results is scheduled for
today,
A telephone replay of the call will be available until
About Tillys
Tillys is a leading destination specialty retailer of
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
Tilly’s, Inc. | |||||||
Consolidated Balance Sheets | |||||||
(In thousands, except par value and per share data) |
|||||||
(unaudited) |
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April 30, 2016 |
January 30, |
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ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 43,474 | $ | 51,020 | |||
Marketable securities | 44,909 | 49,932 | |||||
Receivables | 5,900 | 5,397 | |||||
Merchandise inventories | 59,719 | 51,357 | |||||
Prepaid expenses and other current assets | 16,100 | 12,968 | |||||
Total current assets | 170,102 | 170,674 | |||||
Property and equipment, net | 98,841 | 99,026 | |||||
Other assets | 1,031 | 1,051 | |||||
Total assets | $ | 269,974 | $ | 270,751 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 21,543 | $ | 16,022 | |||
Accrued expenses | 18,504 | 18,901 | |||||
Deferred revenue | 6,866 | 8,174 | |||||
Accrued compensation and benefits | 4,215 | 5,751 | |||||
Current portion of deferred rent | 6,115 | 6,106 | |||||
Current portion of capital lease obligation | 872 | 858 | |||||
Total current liabilities | 58,115 | 55,812 | |||||
Long-term portion of deferred rent | 40,031 | 40,891 | |||||
Long-term portion of capital lease obligation | 612 | 835 | |||||
Total long-term liabilities | 40,643 | 41,726 | |||||
Total liabilities | 98,758 | 97,538 | |||||
Stockholders’ equity: | |||||||
Common stock (Class A), $0.001 par value; April 30, 2016 - 100,000
shares authorized, |
12 | 12 | |||||
Common stock (Class B), $0.001 par value; April 30, 2016 - 35,000
shares authorized, 16,069 |
16 | 16 | |||||
Preferred stock, $0.001 par value; April 30, 2016 and January 30,
2016 - 10,000 shares |
— | — | |||||
Additional paid-in capital | 134,308 | 133,550 | |||||
Retained earnings | 36,868 | 39,613 | |||||
Accumulated other comprehensive income | 12 | 22 | |||||
Total stockholders’ equity | 171,216 | 173,213 | |||||
Total liabilities and stockholders’ equity | $ | 269,974 | $ | 270,751 | |||
Tilly’s, Inc. | |||||||||
Consolidated Statements of (Loss) Income | |||||||||
(In thousands, except per share data) |
|||||||||
(unaudited) |
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Thirteen Weeks Ended | |||||||||
April 30, 2016 |
May 2, 2015 |
||||||||
Net sales | $ | 120,218 | $ | 120,190 | |||||
Cost of goods sold (includes buying, distribution, and occupancy costs) | 87,631 | 84,138 | |||||||
Gross profit | 32,587 | 36,052 | |||||||
Selling, general and administrative expenses | 36,554 | 33,923 | |||||||
Operating (loss) income | (3,967 | ) | 2,129 | ||||||
Other income, net | 76 | 8 | |||||||
(Loss) Income before income taxes | (3,891 | ) | 2,137 | ||||||
Income tax (benefit) expense | (1,146 | ) | 855 | ||||||
Net (loss) income | $ | (2,745 | ) | $ | 1,282 | ||||
Basic (loss) earnings per share of Class A and Class B common stock | $ | (0.10 | ) | $ | 0.05 | ||||
Diluted (loss) earnings per share of Class A and Class B common stock | $ | (0.10 | ) | $ | 0.05 | ||||
Weighted average basic shares outstanding | 28,425 | 28,173 | |||||||
Weighted average diluted shares outstanding | 28,425 | 28,321 | |||||||
Tilly’s, Inc. | ||||||||||||||
Supplemental Information - Consolidated Statements of (Loss) Income | ||||||||||||||
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures |
||||||||||||||
(In thousands, except per share data) |
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(unaudited) |
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Operating |
Net |
Basic Loss |
||||||||||||
Thirteen Weeks Ended April 30, 2016 | ||||||||||||||
As reported | $ | (3,967 | ) | $ | (2,745 | ) | $ | (0.10 | ) | |||||
Add back: | ||||||||||||||
Legal provision | 1,700 | 1,700 | 0.06 | |||||||||||
Less: Income tax effect of legal provision | — | (664 | ) | (0.02 | ) | |||||||||
As adjusted for non-GAAP items | $ | (2,267 | ) | $ | (1,709 | ) | $ | (0.06 | ) | |||||
Tilly’s, Inc. | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(In thousands) |
||||||||
(unaudited) |
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Thirteen Weeks Ended | ||||||||
April 30, 2016 |
May 2, |
|||||||
Cash flows from operating activities | ||||||||
Net (loss) income | $ | (2,745 | ) | $ | 1,282 | |||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 5,805 | 5,611 | ||||||
Stock-based compensation expense | 850 | 1,269 | ||||||
Impairment of assets | 682 | — | ||||||
Loss on disposal of assets | 3 | 49 | ||||||
Gain on sales and maturities of marketable securities | (51 | ) | (31 | ) | ||||
Deferred income taxes | 29 | 138 | ||||||
Excess tax benefit from stock-based compensation | — | (92 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Receivables | (503 | ) | (793 | ) | ||||
Merchandise inventories | (8,362 | ) | (10,189 | ) | ||||
Prepaid expenses and other assets | (3,134 | ) | 201 | |||||
Accounts payable | 5,109 | 1,469 | ||||||
Accrued expenses | (1,970 | ) | 1,606 | |||||
Accrued compensation and benefits | (1,536 | ) | (1,731 | ) | ||||
Deferred rent | (851 | ) | (562 | ) | ||||
Deferred revenue | (1,308 | ) | (1,253 | ) | ||||
Net cash used in operating activities | (7,982 | ) | (3,026 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (4,325 | ) | (5,084 | ) | ||||
Proceeds from sale of property and equipment | 5 | — | ||||||
Purchases of marketable securities | (19,943 | ) | (14,985 | ) | ||||
Maturities of marketable securities | 25,000 | 15,000 | ||||||
Net cash provided by (used in) investing activities | 737 | (5,069 | ) | |||||
Cash flows from financing activities | ||||||||
Proceeds from exercise of stock options | — | 2,592 | ||||||
Payment of capital lease obligation | (209 | ) | (197 | ) | ||||
Taxes paid in lieu of shares issued for stock-based compensation | (92 | ) | — | |||||
Excess tax benefit from stock-based compensation | — | 92 | ||||||
Net cash (used in) provided by financing activities | (301 | ) | 2,487 | |||||
Change in cash and cash equivalents | (7,546 | ) | (5,608 | ) | ||||
Cash and cash equivalents, beginning of period | 51,020 | 49,789 | ||||||
Cash and cash equivalents, end of period | $ | 43,474 | $ | 44,181 | ||||
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) |
||||||||
2015 Q1 | 212 | 2 | 1 | 213 | 1,630 | |||||||
2015 Q2 | 213 | 3 | — | 216 | 1,655 | |||||||
2015 Q3 | 216 | 4 | — | 220 | 1,681 | |||||||
2015 Q4 | 220 | 6 | 2 | 224 | 1,704 | |||||||
2016 Q1 | 224 | — | — | 224 | 1,704 | |||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160525006190/en/
Source: Tilly’s, Inc.
Investor Relations:
Tilly’s, Inc.
Christopher
M. Lal, 949-609-5599, ext. 17000
VP General Counsel
irelations@tillys.com