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Tilly’s, Inc. Announces Fiscal 2019 First Quarter Results
Comp Store Net Sales Increase 2.4%; EPS of
Introduces Second Quarter Outlook
“Tillys continued its positive momentum during the first quarter of
fiscal 2019 with its twelfth consecutive quarter of flat to positive
comp sales," commented
First Quarter Results Overview
The following comparisons refer to operating results for the first
quarter of fiscal 2019 versus the first quarter of fiscal 2018 ended
-
Total net sales were
$130.3 million , an increase of$6.7 million or 5.4%, compared to$123.6 million last year. The Company ended first quarter of fiscal 2019 with 229 total stores compared to 222 total stores last year, both including three RSQ-branded pop-up stores. - Comparable store net sales, which includes e-commerce net sales, increased 2.4% compared to an increase of 0.1% during last year's first quarter. E-commerce net sales increased 29.6% and represented approximately 15.1% of total net sales this year, compared to a decrease of 7.2% and a 12.2% share of total net sales last year. Comparable store net sales in physical stores decreased 1.4% and represented approximately 84.9% of total net sales, compared to an increase of 1.2% and an 87.8% share of total net sales last year.
-
Gross profit was
$35.7 million , an increase of$0.7 million or 2.0%, compared to$35.0 million last year. Gross margin, or gross profit as a percentage of net sales, decreased to 27.4% from 28.3% last year. This 90 basis point decrease in gross margin was primarily due to an 80 basis point increase in distribution costs primarily as a result of higher e-commerce shipping costs associated with strong e-commerce net sales growth and a 70 basis point decrease in product margins due to higher total markdowns. These cost increases were partially offset by 60 basis points of improved leverage of occupancy and buying costs as a percentage of net sales. -
Selling, general and administrative expenses ("SG&A") were
$35.5 million , or 27.3% of net sales, compared to$33.6 million , or 27.2% of net sales, last year. The$1.9 million increase in SG&A was primarily attributable to an increase in store payroll of approximately$1.0 million due in part to minimum wage and annual merit increases, and an increase in e-commerce marketing and fulfillment expenses of approximately$0.8 million associated with e-commerce net sales growth. -
Operating income was
$0.1 million , or 0.1% of net sales, compared to$1.3 million , or 1.1% of net sales, last year. The$1.2 million decline in operating results was largely attributable to the increased costs associated with e-commerce net sales growth and the minimum wage impact on store payroll, as explained above, partially offset by the positive impact of improved comp sales results. -
Other income increased to
$0.8 million from$0.4 million last year, primarily due to higher interest rates on our cash and marketable securities investment portfolio compared to last year. -
Income tax expense was
$0.3 million , or 30.6% of pre-tax income, compared to$0.5 million , or 28.6% of pre-tax income, last year. Income tax expense includes certain discrete items associated with employee stock-based award activity in both periods. -
Net income was
$0.7 million , or$0.02 per diluted share, compared to$1.2 million , or$0.04 per diluted share, last year.
Balance Sheet and Liquidity
As of
Fiscal 2019 Second Quarter Outlook
The Company's quarter-to-date comparable store net sales have decreased
6.6% through
Regarding the legal settlement coupons the Company issued last
September, less than 2% have been redeemed to date, resulting in no
material impact on its business. All such coupons will expire on
Conference Call Information
A conference call to discuss these financial results is scheduled for
today,
A telephone replay of the call will be available until
About Tillys
Tillys is a leading specialty retailer of casual apparel, footwear and
accessories for young men, young women, boys and girls with an extensive
assortment of iconic global, emerging, and proprietary brands rooted in
an active and social lifestyle. Tillys is headquartered in
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) |
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(unaudited) |
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May 4, |
February 2, |
May 5, |
|||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 33,864 | $ | 68,160 | $ | 41,190 | |||||
Marketable securities | 75,953 | 75,919 | 63,799 | ||||||||
Receivables | 6,288 | 6,082 | 4,955 | ||||||||
Merchandise inventories | 58,963 | 55,809 | 56,837 | ||||||||
Prepaid expenses and other current assets | 5,294 | 11,171 | 9,266 | ||||||||
Total current assets | 180,362 | 217,141 | 176,047 | ||||||||
Operating lease assets | 244,139 | — | — | ||||||||
Property and equipment, net | 70,608 | 73,842 | 80,542 | ||||||||
Other assets | 2,176 | 2,185 | 3,277 | ||||||||
Total assets | $ | 497,285 | $ | 293,168 | $ | 259,866 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 23,479 | $ | 24,207 | $ | 19,504 | |||||
Accrued expenses | 17,044 | 18,756 | 23,713 | ||||||||
Deferred revenue | 9,105 | 10,373 | 7,622 | ||||||||
Accrued compensation and benefits | 7,019 | 8,930 | 6,614 | ||||||||
Dividends payable | — | 29,453 | — | ||||||||
Current portion of operating lease liabilities | 52,600 | — | — | ||||||||
Current portion of deferred rent | — | 5,540 | 5,322 | ||||||||
Total current liabilities | 109,247 | 97,259 | 62,775 | ||||||||
Noncurrent operating lease liabilities | 222,086 | — | — | ||||||||
Noncurrent deferred rent | — | 30,825 | 30,857 | ||||||||
Other | 1,422 | 1,757 | 2,476 | ||||||||
Total liabilities | 332,755 | 129,841 | 96,108 | ||||||||
Stockholders’ equity: | |||||||||||
Common stock (Class A), $0.001 par value; 100,000 shares authorized; 21,816, 21,642 and 15,197 shares issued and outstanding, respectively | 22 | 21 | 15 | ||||||||
Common stock (Class B), $0.001 par value; 35,000 shares authorized; 7,706, 7,844 and 13,948 shares issued and outstanding, respectively | 8 | 8 | 14 | ||||||||
Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued or outstanding | — | — | — | ||||||||
Additional paid-in capital | 150,331 | 149,737 | 144,550 | ||||||||
Retained earnings | 14,012 | 13,335 | 19,068 | ||||||||
Accumulated other comprehensive income | 157 | 226 | 111 | ||||||||
Total stockholders’ equity | 164,530 | 163,327 | 163,758 | ||||||||
Total liabilities and stockholders’ equity | $ | 497,285 | $ | 293,168 | $ | 259,866 | |||||
Tilly’s, Inc. | |||||||
Consolidated Statements of Income | |||||||
(In thousands, except per share data) |
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(unaudited) |
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Three Months Ended | |||||||
May 4, |
May 5, |
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Net sales | $ | 130,303 | $ | 123,634 | |||
Cost of goods sold (includes buying, distribution, and occupancy costs) | 94,619 | 88,657 | |||||
Gross profit | 35,684 | 34,977 | |||||
Selling, general and administrative expenses | 35,538 | 33,646 | |||||
Operating income | 146 | 1,331 | |||||
Other income, net | 829 | 383 | |||||
Income before income taxes | 975 | 1,714 | |||||
Income tax expense | 298 | 491 | |||||
Net income | $ | 677 | $ | 1,223 | |||
Basic income per share of Class A and Class B common stock | $ | 0.02 | $ | 0.04 | |||
Diluted income per share of Class A and Class B common stock | $ | 0.02 | $ | 0.04 | |||
Weighted average basic shares outstanding | 29,469 | 29,080 | |||||
Weighted average diluted shares outstanding | 29,808 | 29,438 | |||||
Tilly’s, Inc. | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(In thousands) |
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(unaudited) |
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Three Months Ended | ||||||||
May 4, |
May 5, |
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Cash flows from operating activities | ||||||||
Net income | $ | 677 | $ | 1,223 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Depreciation and amortization | 5,209 | 5,815 | ||||||
Stock-based compensation expense | 529 | 580 | ||||||
Impairment of assets | — | 145 | ||||||
Loss on disposal of assets | 10 | — | ||||||
Gain on sales and maturities of marketable securities | (549 | ) | (265 | ) | ||||
Deferred income taxes | (130 | ) | (87 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Receivables | 246 | (603 | ) | |||||
Merchandise inventories | (3,154 | ) | (3,811 | ) | ||||
Prepaid expenses and other assets | 479 | 246 | ||||||
Accounts payable | (895 | ) | (1,710 | ) | ||||
Accrued expenses | (806 | ) | 107 | |||||
Accrued compensation and benefits | (1,911 | ) | 495 | |||||
Operating lease liabilities and deferred rent | (715 | ) | (381 | ) | ||||
Deferred revenue | (1,268 | ) | (1,084 | ) | ||||
Net cash (used in) provided by operating activities | (2,278 | ) | 670 | |||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (3,059 | ) | (2,946 | ) | ||||
Purchases of marketable securities | (34,572 | ) | (21,052 | ) | ||||
Proceeds from marketable securities | 35,000 | 40,397 | ||||||
Net cash (used in) provided by investing activities | (2,631 | ) | 16,399 | |||||
Cash flows from financing activities | ||||||||
Dividends paid | (29,453 | ) | (29,067 | ) | ||||
Proceeds from exercise of stock options | 151 | 85 | ||||||
Taxes paid in lieu of shares issued for stock-based compensation | (85 | ) | (99 | ) | ||||
Net cash used in financing activities | (29,387 | ) | (29,081 | ) | ||||
Change in cash and cash equivalents | (34,296 | ) | (12,012 | ) | ||||
Cash and cash equivalents, beginning of period | 68,160 | 53,202 | ||||||
Cash and cash equivalents, end of period | $ | 33,864 | $ | 41,190 | ||||
Tilly's, Inc. | |||||||||||
Store Count and Square Footage | |||||||||||
Stores |
Stores |
Stores |
Stores |
Total Gross |
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2018 Q1 | 219 | 4 | 1 | 222 | 1,675 | ||||||
2018 Q2 | 222 | 4 | — | 226 | 1,698 | ||||||
2018 Q3 | 226 | 5 | 4 | 227 | 1,693 | ||||||
2018 Q4 | 227 | 2 | — | 229 | 1,703 | ||||||
2019 Q1 | 229 | 1 | 1 | 229 | 1,708 | ||||||
Note: Total stores opened during fiscal 2018 includes four RSQ-branded, pop-up stores.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190529005689/en/
Source: Tilly’s, Inc.
Investor Relations Contact:
Michael
Henry, Chief Financial Officer
(949) 609-5599, ext. 17000
irelations@tillys.com