IRVINE, Calif.--(BUSINESS WIRE)--Tilly’s, Inc. (NYSE:TLYS) today announced financial results for the second quarter (13 weeks) and first half (26 weeks) of fiscal 2015 ended August 1, 2015.
“Second quarter results were in line with our outlook, with sales growth driven by new store openings over the past twelve months and a strong e-commerce business. We maintained our diligent inventory management, resulting in continued healthy product margins, and began the third quarter with inventory well positioned for the back-to-school season. Our merchandise offering is resonating well with our customers and we are encouraged by the solid start to the third quarter,” commented Daniel Griesemer, President and Chief Executive Officer.
Second Quarter Results Overview
The following comparisons refer to operating results for the second quarter of fiscal 2015 versus the second quarter of fiscal 2014 ended August 2, 2014:
- Total net sales were $130 million compared to $123 million, an increase of $7 million or 6%.
- Comparable store sales, which include e-commerce sales, increased 0.5%.
- Gross profit was $36.6 million compared to $34.7 million, an increase of $1.9 million or 6%. Gross margin, or gross profit as a percentage of net sales, was 28.1% compared to 28.2%. This slight decrease was primarily due to a 40 basis point decline in product margins, partially offset by lower buying, distribution and occupancy costs as a percentage of net sales.
- Operating income was $1.1 million compared to $2.3 million and included an aggregate of $0.9 million in non-cash store asset impairment charges and an accrual for a potential legal settlement.
- Net income was $0.6 million, or $0.02 per diluted share, compared to $1.3 million, or $0.05 per diluted share. Our effective tax rate was 50% compared to 46%, and was higher primarily due to a tax settlement related to a prior tax year.
First Half Results Overview
The following comparisons refer to operating results for the first half of fiscal 2015 versus the first half of fiscal 2014 ended August 2, 2014:
- Total net sales were $250 million compared to $234 million, an increase of $16 million or 7%.
- Comparable store sales, which include e-commerce sales, increased 1.2%.
- Gross profit was $72.6 million compared to $66.0 million, an increase of $6.6 million or 10%. Gross margin was 29.0% compared to 28.2%. This 80 basis point increase was primarily due to lower buying, distribution and occupancy costs as a percentage of net sales and a 20 basis point increase in product margins.
- Operating income was $3.2 million compared to $3.4 million and included an aggregate of $0.9 million in non-cash store asset impairment charges and an accrual for a potential legal settlement.
- Net income was $1.8 million, or $0.06 per diluted share, compared to $1.9 million, or $0.07 per diluted share.
Balance Sheet and Liquidity
As of August 1, 2015, the Company had $77 million of cash and marketable securities and no debt outstanding under its revolving credit facility. This compares to $57 million of cash and marketable securities and no debt as of August 2, 2014.
Third Quarter 2015 Outlook
The Company expects third quarter comparable store sales growth to be positive low single digits and net income per diluted share to be in the range of $0.12 to $0.16. This assumes an anticipated effective tax rate of approximately 40% and a weighted average diluted share count of 28.8 million shares.
Conference Call Information
A conference call to discuss the financial results is scheduled for today, August 26, 2015, 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) 397-0298 at 4:25 p.m. ET (1:25 p.m. PT). 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 September 9, 2015, by dialing (877) 870-5176 (domestic) or (858) 384-5517 (international) and entering the conference identification number: 5988386. Please note participants must enter the conference identification number in order to access the replay.
Tillys is a fast-growing destination specialty retailer of West Coast inspired apparel, footwear and accessories with an extensive assortment of the most relevant and sought-after brands rooted in action sports, music, art and fashion. Tillys is headquartered in Southern California and, as of August 26, 2015, operated 216 stores and through its website, www.tillys.com.
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 financials and operating results, including but not limited to future comparable store sales, future net income, future earnings per share, 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, 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 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 Securities and Exchange Commission (“SEC”) on April 1, 2015, including those detailed in the section titled “Risk Factors” and in our other filings with the SEC, which are available from the SEC’s website at www.sec.gov and from 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.
Consolidated Balance Sheets
(In thousands, except per par value share data)
|Cash and cash equivalents||$||51,725||$||49,789|
|Prepaid expenses and other current assets||13,222||12,349|
|Total current assets||181,245||153,284|
|Property and equipment, net||101,214||101,335|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accrued compensation and benefits||6,322||5,911|
|Current portion of deferred rent||5,477||6,070|
|Current portion of capital lease obligation||832||806|
|Total current liabilities||75,540||55,296|
|Long-term portion of deferred rent||42,821||41,875|
|Long-term portion of capital lease obligation`||1,271||1,694|
|Total long-term liabilities||44,092||43,569|
|Commitments and contingencies|
|Common stock (Class A), $0.001 par value; August 1, 2015 - 100,000 shares authorized, 12,297|
|shares issued and outstanding; January 31, 2015 - 100,000 shares authorized, 11,546 shares issued and|
|Common stock (Class B), $0.001 par value; August 1, 2015 - 35,000 shares authorized, 16,169 shares|
|issued and outstanding; January 31, 2015 - 35,000 shares authorized, 16,544 shares issued and|
|Preferred stock, $0.001 par value; August 1, 2015 and January 31, 2015 - 10,000 shares authorized,|
|no shares issued or outstanding||-||-|
|Additional paid-in capital||131,960||126,565|
|Accumulated other comprehensive income||13||21|
|Total stockholders' equity||165,915||158,686|
|Total liabilities and stockholders' equity||$||285,547||$||257,551|
Consolidated Statements of Income
(In thousands, except per share data)
|Thirteen Weeks Ended||Twenty-Six Weeks Ended|
|Cost of goods sold (includes buying, distribution, and occupancy costs)||93,427||88,405||177,565||168,212|
|Selling, general and administrative expenses||35,492||32,326||69,415||62,576|
|Other income, net||10||4||18||3|
|Income before income taxes||1,114||2,333||3,251||3,409|
|Income tax expense||554||1,067||1,409||1,552|
|Basic earnings per share of Class A and Class B common stock||$||0.02||$||0.05||$||0.07||$||0.07|
|Diluted earnings per share of Class A and Class B common stock||$||0.02||$||0.05||$||0.06||$||0.07|
|Weighted average basic shares outstanding||28,333||28,014||28,253||27,999|
|Weighted average diluted shares outstanding||28,426||28,049||28,403||28,100|
Consolidated Statements of Cash Flows
|Twenty-Six Weeks Ended|
|Cash flows from operating activities|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||11,260||10,182|
|Stock-based compensation expense||2,301||1,903|
|Loss on disposal of assets||67||39|
|Impairment of assets||367||-|
|Gain on sales and maturities of marketable securities||(65||)||(77||)|
|Deferred income taxes||147||334|
|Excess tax benefit from stock-based compensation||(95||)||-|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||(1,171||)||(1,268||)|
|Accrued compensation and benefits||411||782|
|Net cash provided by operating activities||607||11,743|
|Cash flows from investing activities|
|Purchase of property and equipment||(11,481||)||(14,587||)|
|Proceeds from sale of property and equipment||-||9|
|Purchases of marketable securities||(19,982||)||(24,961||)|
|Maturities of marketable securities||30,000||35,000|
|Net cash used in investing activities||(1,463||)||(4,539||)|
|Cash flows from financing activities|
|Proceeds from exercise of stock options||3,094||165|
|Payment of capital lease obligation||(397||)||(373||)|
|Excess tax benefit from stock-based compensation||95||-|
|Net cash provided by (used in) financing activities||2,792||(208||)|
|Change in cash and cash equivalents||1,936||6,996|
|Cash and cash equivalents, beginning of period||49,789||25,412|
|Cash and cash equivalents, end of period||$||51,725||$||32,408|
|Store Count and Square Footage|
|Open at||Opened||Closed||Open at||End of Qtr|
|Beg of Qtr||During Qtr||During Qtr||End of Qtr||(in thousands)|