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Tilly’s, Inc. Announces Third Quarter Fiscal 2014 Results
Introduces Fourth Quarter Fiscal 2014 Outlook
-
Third Quarter Net Sales of
$131.3 million ; Comp Store Sales Decreased 1.2% -
Third Quarter EPS of
$0.18
“We are pleased with the meaningful progress we are making on our
initiatives to increase sales and profitability as our third quarter
results exceeded expectations. While we recognize there is more work to
be done, we are encouraged that our focus on product differentiation and
innovation, and improved digital capabilities, in conjunction with a
slightly better teen retail environment, are contributing to a general
improvement in customer response. These efforts, as well as strong
inventory management, resulted in increased product margins in the
quarter,” commented
For the third quarter ended
-
Total net sales were
$131.3 million compared to$123.8 million in the third quarter of 2013. - Comparable store sales, which include e-commerce sales, decreased 1.2% compared to the same 13-week period in 2013.
-
Gross profit increased 7.1% to
$40.5 million compared to$37.8 million in the third quarter of 2013. Gross margin was 30.9% compared to 30.6% in the third quarter of 2013, primarily due to a 30 basis point increase in product margins. -
Operating income was
$8.6 million compared to operating income of$10.2 million in the third quarter of 2013. -
Net income was
$5.1 million , or$0.18 per diluted share, based on a weighted average diluted share count of 28.0 million shares and an effective tax rate of 40.2%. This compares to net income in the third quarter of 2013 of$6.1 million , or$0.22 per diluted share, based on a weighted average diluted share count of 28.2 million shares and an effective tax rate of 40.1%.
For the thirty-nine weeks ended
-
Total net sales were
$365.5 million compared to$355.9 million for the first three quarters of the prior year. - Comparable store sales, which include e-commerce sales, decreased 5.0% compared to the first three quarters of 2013.
-
Gross profit decreased 0.9% to
$106.5 million compared to$107.5 million in the first three quarters of 2013. Gross margin was 29.1%, compared to 30.2% in the prior year period. Product margins increased 20 basis points, offset by higher occupancy costs as a percentage of net sales due to the negative comparable store sales. -
Operating income was
$12.0 million compared to$21.3 million in the first three quarters of 2013. -
Net income was
$7.0 million , or$0.25 per diluted share, based on a weighted average diluted share count of 28.1 million shares. This compares to net income in the first three quarters of 2013 of$12.7 million , or$0.45 per diluted share, based on a weighted average diluted share count of 28.1 million shares.
Balance Sheet and Liquidity
As of
Fourth Quarter 2014 Outlook
The Company expects fourth quarter comparable store sales to be flat to
negative low 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,
anticipated tax rate, and market share 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 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 per share data) (Unaudited) |
||||||
November 1, | February 1, | |||||
2014 | 2014 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 31,358 | $ | 25,412 | ||
Marketable securities | 29,969 | 34,943 | ||||
Receivables | 5,856 | 8,545 | ||||
Merchandise inventories | 62,196 | 46,266 | ||||
Prepaid expenses and other current assets | 12,656 | 11,772 | ||||
Total current assets | 142,035 | 126,938 | ||||
Property and equipment, net | 105,607 | 100,936 | ||||
Other assets | 5,011 | 4,533 | ||||
Total assets | $ | 252,653 | $ | 232,407 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 27,948 | $ | 19,645 | ||
Deferred revenue | 4,725 | 6,214 | ||||
Accrued compensation and benefits | 3,837 | 4,975 | ||||
Accrued expenses | 14,118 | 9,241 | ||||
Current portion of deferred rent | 6,098 | 5,395 | ||||
Current portion of capital lease obligation/Related party | 794 | 758 | ||||
Total current liabilities | 57,520 | 46,228 | ||||
Long-term portion of deferred rent | 42,574 | 42,756 | ||||
Long-term portion of capital lease obligation/Related party | 1,900 | 2,500 | ||||
Total long-term liabilities | 44,474 | 45,256 | ||||
Total liabilities | 101,994 | 91,484 | ||||
Commitments and contingencies | ||||||
Stockholders' equity: | ||||||
Common stock (Class A), $0.001 par value; November 1, 2014 - 100,000 shares authorized, 11,499 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; November 1, 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; November 1, 2014 and February 1, 2014 - 10,000 shares authorized, no shares issued or outstanding |
- | - | ||||
Additional paid-in capital | 125,652 | 122,886 | ||||
Retained earnings | 24,967 | 17,997 | ||||
Accumulated other comprehensive income | 12 | 12 | ||||
Total stockholders' equity | 150,659 | 140,923 | ||||
Total liabilities and stockholders' equity | $ | 252,653 | $ | 232,407 | ||
Tilly’s, Inc. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) |
||||||||||||||
Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||
November 1, | November 2, | November 1, | November 2, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Net sales | $ | 131,283 | $ | 123,779 | $ | 365,477 | $ | 355,941 | ||||||
Cost of goods sold (includes buying, distribution, and occupancy costs) (1) | 90,735 | 85,936 | 258,947 | 248,403 | ||||||||||
Gross profit (1) | 40,548 | 37,843 | 106,530 | 107,538 | ||||||||||
Selling, general and administrative expenses (1) | 31,971 | 27,693 | 94,548 | 86,271 | ||||||||||
Operating income | 8,577 | 10,150 | 11,982 | 21,267 | ||||||||||
Other (expense) income, net | (22 | ) | 116 | (18 | ) | 20 | ||||||||
Income before income taxes | 8,555 | 10,266 | 11,964 | 21,287 | ||||||||||
Income tax expense | 3,442 | 4,121 | 4,994 | 8,566 | ||||||||||
Net income | $ | 5,113 | $ | 6,145 | $ | 6,970 | $ | 12,721 | ||||||
Basic earnings per share of Class A and Class B common stock | $ | 0.18 | $ | 0.22 | $ | 0.25 | $ | 0.46 | ||||||
Diluted earnings per share of Class A and Class B common stock | $ | 0.18 | $ | 0.22 | $ | 0.25 | $ | 0.45 | ||||||
Weighted average basic shares outstanding | 28,024 | 27,884 | 28,007 | 27,768 | ||||||||||
Weighted average diluted shares outstanding | 28,046 | 28,166 | 28,082 | 28,091 | ||||||||||
(1) | Gross profit in the third quarter and the first nine months of fiscal 2013 includes a $0.3 million and a $1.0 million, respectively, 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) |
||||||||
Thirty-Nine Weeks Ended | ||||||||
November 1, | November 2, | |||||||
2014 | 2013 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 6,970 | $ | 12,721 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 15,630 | 14,470 | ||||||
Loss on disposal of assets | 79 | 133 | ||||||
Gain on sales and maturities of marketable securities | (86 | ) | (161 | ) | ||||
Deferred income taxes | 598 | 351 | ||||||
Stock-based compensation expense | 2,710 | 2,373 | ||||||
Excess tax benefit from stock-based compensation | - | (157 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Receivables | 2,689 | 33 | ||||||
Merchandise inventories | (15,930 | ) | (9,783 | ) | ||||
Prepaid expenses and other assets | (2,085 | ) | (2,410 | ) | ||||
Accounts payable | 8,155 | 8,144 | ||||||
Accrued expenses | 4,436 | 443 | ||||||
Accrued compensation and benefits | (1,138 | ) | (2,687 | ) | ||||
Deferred rent | 521 | 5,121 | ||||||
Deferred revenue | (1,489 | ) | (1,335 | ) | ||||
Net cash provided by operating activities | 21,060 | 27,256 | ||||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (19,806 | ) | (36,015 | ) | ||||
Proceeds from sale of property and equipment | 14 | 21 | ||||||
Purchases of marketable securities | (34,939 | ) | (29,935 | ) | ||||
Maturities of marketable securities | 40,000 | 40,000 | ||||||
Net cash used in investing activities | (14,731 | ) | (25,929 | ) | ||||
Cash flows from financing activities | ||||||||
Payment of capital lease obligation | (564 | ) | (530 | ) | ||||
Proceeds from exercise of stock options | 181 | 3,025 | ||||||
Tax withholding payments related to exercise of stock options | - | (636 | ) | |||||
Excess tax benefit from stock-based compensation | - | 157 | ||||||
Net cash (used in) provided by financing activities | (383 | ) | 2,016 | |||||
Change in cash and cash equivalents | 5,946 | 3,343 | ||||||
Cash and cash equivalents, beginning of period | 25,412 | 17,314 | ||||||
Cash and cash equivalents, end of period | $ | 31,358 | $ | 20,657 | ||||
Tilly's, Inc. | ||||||||||
Store Count and Square Footage | ||||||||||
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 | |||||
2014 Q2 | 198 | 6 | 1 | 203 | 1,563 | |||||
2014 Q3 | 203 | 5 | 1 | 207 | 1,589 |
Source: Tilly’s, Inc.
Investor Relations:
ICR, Inc.
Anne
Rakunas/Joseph Teklits
310-954-1113
anne.rakunas@icrinc.com