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Tilly’s, Inc. Announces First Quarter Fiscal 2014 Results and Introduces Second Quarter Fiscal 2014 Outlook
-
First Quarter Net Sales of
$111.1 million ; Comp Store Sales Decreased 6.8% -
First Quarter EPS of
$0.02
“Earnings results were in line with our expectations and reflect the
continuation of a tough retail environment and the planned reduction in
our clearance merchandise, which put pressure on our comparable store
sales. We delivered strong product margin improvement through careful
inventory management and operating discipline, and our inventory is well
positioned for the summer selling season. We also advanced our strategic
initiatives including the opening of our new dedicated e-commerce
fulfillment center,” commented
For the first quarter ended
-
Total net sales were
$111.1 million , an increase of 1.8% compared to$109.1 million in the first quarter of 2013. -
Comparable store sales, which include e-commerce sales, decreased 6.8%
compared to the same 13-week period in 2013. E-commerce sales were
$12.7 million , an increase of approximately 1.2% compared to the same thirteen-week period in 2013. -
Gross profit was
$31.3 million compared to$31.8 million in the first quarter of 2013. Gross margin was 28.2% compared to 29.1% in the first quarter of 2013. Product margins increased approximately 60 basis points, offset primarily by deleverage in occupancy costs as a result of the negative comparable store sales. -
Operating income was
$1.1 million and compares to operating income of$3.9 million in the first quarter of 2013. -
Net income was
$0.6 million , or$0.02 per diluted share, based on a weighted average diluted share count of 28.2 million shares and an effective tax rate of approximately 45%, reflecting a discrete item related to stock option forfeitures. This compares to net income in the first quarter of 2013 of$2.3 million , or$0.08 per diluted share, based on a weighted average diluted share count of 28.0 million shares and an effective tax rate of 40%.
Balance Sheet and Liquidity
As of
Second Quarter 2014 Outlook
We continue to experience weak traffic trends and a highly promotional
environment in teen retail. If these trends continue, we would expect
second quarter comparable store sales to decline in the high single
digits, and net income per diluted share to be in the range of
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 Tilly’s
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 net income, future gross, operating or product margins,
and anticipated tax rate and our business and strategy, including but
not limited to store expansion, expansion of brands and exclusive
relationships, development and growth of our ecommerce platform and
business, 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 ecommerce business, effectively manage
our inventory and costs, effectively compete with other retailers,
enhance our 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 per share data) (Unaudited) |
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May 3, 2014 |
February 1, 2014 |
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ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 27,396 | $ | 25,412 | ||||
Marketable securities | 24,971 | 34,943 | ||||||
Receivables | 9,296 | 8,545 | ||||||
Merchandise inventories | 52,850 | 46,266 | ||||||
Prepaid expenses and other current assets | 11,948 | 11,772 | ||||||
Total current assets | 126,461 | 126,938 | ||||||
Property and equipment, net | 105,146 | 100,936 | ||||||
Other assets | 4,715 | 4,533 | ||||||
Total assets | $ | 236,322 | $ | 232,407 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 21,766 | $ | 19,645 | ||||
Deferred revenue | 5,202 | 6,214 | ||||||
Accrued compensation and benefits | 3,458 | 4,975 | ||||||
Accrued expenses | 11,648 | 9,241 | ||||||
Current portion of deferred rent | 5,509 | 5,395 | ||||||
Current portion of capital lease obligation/Related party | 770 | 758 | ||||||
Total current liabilities | 48,353 | 46,228 | ||||||
Long-term portion of deferred rent | 43,440 | 42,756 | ||||||
Long-term portion of capital lease obligation/Related party | 2,303 | 2,500 | ||||||
Total long-term liabilities | 45,743 | 45,256 | ||||||
Total liabilities | 94,096 | 91,484 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock (Class A), $0.001 par value; May 3, 2014 - 100,000 shares authorized, 11,429 | ||||||||
shares issued and outstanding; February 1, 2014 - 100,000 shares authorized, 11,361 shares issued and | ||||||||
outstanding | 11 | 11 | ||||||
Common stock (Class B), $0.001 par value; May 3, 2014 - 35,000 shares authorized, 16,574 shares | ||||||||
issued and outstanding; February 1, 2014 - 35,000 shares authorized, 16,642 shares issued and | ||||||||
outstanding | 17 | 17 | ||||||
Preferred stock, $0.001 par value; May 3, 2014 and February 1, 2014 - 10,000 shares authorized, | ||||||||
no shares issued or outstanding | - | - | ||||||
Additional paid-in capital | 123,598 | 122,886 | ||||||
Retained earnings | 18,588 | 17,997 | ||||||
Accumulated other comprehensive income | 12 | 12 | ||||||
Total stockholders' equity | 142,226 | 140,923 | ||||||
Total liabilities and stockholders' equity | $ | 236,322 | $ | 232,407 | ||||
Tilly’s, Inc. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) |
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Thirteen Weeks Ended | |||||||||
May 3, 2014 |
May 4, 2013 |
||||||||
Net sales | $ | 111,134 | $ | 109,119 | |||||
Cost of goods sold (includes buying, distribution, and occupancy costs) (1) | 79,807 | 77,313 | |||||||
Gross profit (1) | 31,327 | 31,806 | |||||||
Selling, general and administrative expenses (1) | 30,250 | 27,889 | |||||||
Operating income | 1,077 | 3,917 | |||||||
Other expense, net | - | 49 | |||||||
Income before income taxes | 1,077 | 3,868 | |||||||
Income tax expense | 486 | 1,560 | |||||||
Net income | $ | 591 | $ | 2,308 | |||||
Basic earnings per share of Class A and Class B common stock | $ | 0.02 | $ | 0.08 | |||||
Diluted earnings per share of Class A and Class B common stock | $ | 0.02 | $ | 0.08 | |||||
Weighted average basic shares outstanding | 27,983 | 27,692 | |||||||
Weighted average diluted shares outstanding | 28,151 | 28,027 | |||||||
(1) |
Gross profit in the first quarter of fiscal 2013 includes a $0.4 million reclassification of stock-based compensation expense from selling, general and administrative expenses to cost of goods sold to correct for an immaterial prior period error. |
|
Tilly’s, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
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Thirteen Weeks Ended | ||||||||||
May 3, 2014 |
May 4, 2013 |
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Cash flows from operating activities | ||||||||||
Net income | $ | 591 | $ | 2,308 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 4,776 | 4,650 | ||||||||
Loss (gain) on disposal of assets | 29 | (3 | ) | |||||||
Gain on sales and maturities of marketable securities | (37 | ) | (44 | ) | ||||||
Deferred income taxes | 34 | 347 | ||||||||
Stock-based compensation expense | 838 | 892 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Receivables | (751 | ) | (2,155 | ) | ||||||
Merchandise inventories | (6,584 | ) | (3,070 | ) | ||||||
Prepaid expenses and other assets | (517 | ) | (1,648 | ) | ||||||
Accounts payable | 2,176 | 1,912 | ||||||||
Accrued expenses | 1,279 | 1,493 | ||||||||
Accrued compensation and benefits | (1,517 | ) | (2,728 | ) | ||||||
Deferred rent | 798 | 1,882 | ||||||||
Deferred revenue | (1,012 | ) | (928 | ) | ||||||
Net cash provided by operating activities | 103 | 2,908 | ||||||||
Cash flows from investing activities | ||||||||||
Purchase of property and equipment | (7,943 | ) | (11,435 | ) | ||||||
Proceeds from sale of property and equipment | - | 11 | ||||||||
Purchases of marketable securities | (4,991 | ) | - | |||||||
Maturities of marketable securities | 15,000 | 10,000 | ||||||||
Net cash provided by (used in) investing activities | 2,066 | (1,424 | ) | |||||||
Cash flows from financing activities | ||||||||||
Payment of capital lease obligation | (185 | ) | (174 | ) | ||||||
Net cash used in financing activities | (185 | ) | (174 | ) | ||||||
Change in cash and cash equivalents | 1,984 | 1,310 | ||||||||
Cash and cash equivalents, beginning of period | 25,412 | 17,314 | ||||||||
Cash and cash equivalents, end of period | $ | 27,396 | $ | 18,624 | ||||||
Tilly's, Inc. Store Count and Square Footage |
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Total Gross | |||||||||||||||
Stores | Stores | Stores | Stores | Square Footage | |||||||||||
Open at | Opened | Closed | Open at | End of Qtr | |||||||||||
Beg of Qtr | During Qtr | During Qtr | End of Qtr | (in thousands) | |||||||||||
2013 Q1 | 168 | 7 | 0 | 175 | 1,371 | ||||||||||
2013 Q2 | 175 | 7 | 0 | 182 | 1,423 | ||||||||||
2013 Q3 | 182 | 7 | 0 | 189 | 1,472 | ||||||||||
2013 Q4 | 189 | 7 | 1 | 195 | 1,513 | ||||||||||
2014 Q1 | 195 | 3 | 0 | 198 | 1,535 |
Source: Tilly’s, Inc.
Investor Relations:
ICR, Inc.
Anne
Rakunas/Joseph Teklits
310-954-1113
anne.rakunas@icrinc.com