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     122  0 Kommentare Tilly's, Inc. Announces Fiscal 2019 Fourth Quarter and Full Year Results

    Tilly’s, Inc. (NYSE:TLYS, the "Company") today announced financial results for the fourth quarter and full year of fiscal 2019 ended February 1, 2020.

    "A deeper than expected drop in store traffic and comparable store net sales during the second and third weeks of December resulted in a disappointing fourth quarter overall, which was our first negative comp quarter in over three and a half years," commented Ed Thomas, President and Chief Executive Officer. "Comparable store net sales are off to a positive start thus far in the first quarter of fiscal 2020. However, due to the uncertainty of the potential near-term impacts of the coronavirus situation, we are unable to provide specific earnings guidance at this time."

    Fourth Quarter Results Overview

    The following comparisons refer to operating results for the fourth quarter of fiscal 2019 versus the fourth quarter of fiscal 2018 ended February 2, 2019:

    • Total net sales were $172.5 million, an increase of $1.9 million or 1.1%, compared to $170.6 million last year. The Company ended the quarter with 240 total stores, including one RSQ-branded pop-up store, compared to 229 total stores, including four RSQ-branded pop-up stores, last year.
    • Comparable store net sales, which includes e-commerce net sales, decreased 2.0% compared to last year's increase of 6.4%. Comparable store net sales in physical stores decreased 2.2% and represented approximately 80.7% of total net sales, compared to a decrease of 0.9% and an 80.3% share of total net sales last year. E-commerce net sales decreased 1.2% and represented approximately 19.3% of total net sales, compared to an increase of 49.6% and a 19.7% share of total net sales last year.
    • Gross profit was $52.1 million, or 30.2% of net sales, compared to $52.2 million, or 30.6% of net sales last year. Product margins decreased 20 basis points as a percentage of net sales due to increased markdowns. Occupancy costs deleveraged 70 basis points as a percentage of net sales, primarily due to opening 11 net new stores compared to last year and the negative comparable store net sales result. Distribution costs improved 50 basis points primarily due to lower e-commerce shipping charges compared to last year.
    • Selling, general and administrative expenses ("SG&A") were $43.6 million, or 25.3% of net sales, compared to $41.2 million, or 24.2% of net sales, last year. The $2.4 million increase in SG&A was primarily due to higher store payroll expenses of approximately $1.5 million resulting from minimum wage increases and store count growth, higher worker's compensation claims reserves of $0.8 million, and higher marketing expenses of approximately $0.4 million primarily relating to e-commerce. These expense increases were partially offset by lower corporate bonus provisions of $1.2 million compared to last year. Last year's SG&A also included $0.9 million in expense reductions related to negotiated resolutions of certain vendor disputes.
    • Operating income was $8.5 million, or 4.9% of net sales, compared to $10.9 million, or 6.4% of net sales, last year. The $2.4 million decrease in operating income was primarily due to the net SG&A increase noted above relative to net sales growth noted above.
    • Income tax expense was $2.8 million, or 30.9% of pre-tax income, compared to $3.1 million, or 26.4% of pre-tax income, last year. Income tax expense for fiscal 2019 includes approximately $0.5 million of discrete items related to the acceleration and expiration of certain employee stock options.
    • Net income was $6.3 million, or $0.21 per diluted share, compared to $8.7 million, or $0.29 per diluted share, last year.

    Year-to-Date Results Overview

    The following comparisons refer to operating results for the fifty-two weeks of fiscal 2019 versus the fifty-two weeks of fiscal 2018:

    • Total net sales were $619.3 million, an increase of $20.8 million or 3.5%, compared to $598.5 million last year.
    • Comparable store net sales, which includes e-commerce net sales, increased 0.8% compared to last year's increase of 4.0%. E-commerce net sales increased 9.7% and represented approximately 15.9% of total net sales compared to an increase of 21.7% and a 15% share of total net sales last year. Comparable store net sales in physical stores decreased 0.7% and represented approximately 84.1% of total net sales compared to an increase of 1.4% and a 85% share of last year's total net sales.
    • Gross profit was $186.7 million, an increase of $5.8 million or 3.2%, compared to $180.9 million last year. Gross margin, or gross profit as a percentage of net sales, slightly decreased to 30.1% from 30.2% last year. Product margins were flat compared to last year. Occupancy costs deleveraged 10 basis points primarily due to opening 11 net new stores.
    • SG&A was $158.3 million, or 25.6% of net sales, compared to $149.4 million, or 25.0% of net sales, last year. The $8.8 million increase in SG&A was primarily due to higher store payroll expenses of approximately $3.7 million resulting from minimum wage increases and store count growth, higher marketing expenses of approximately $2.6 million primarily due to e-commerce net sales growth, increased temporary labor expenses of approximately $1.5 million, and higher worker's compensation claims reserves of approximately $0.9 million. These increases were partially offset by a $2.4 million reduction in bonus expenses. Last year's SG&A also included a $1.5 million credit for the favorable resolution of a legal matter and $0.9 million in expense reductions related to negotiated resolutions of certain vendor disputes, which were partially offset by $0.7 million in secondary offering expenses.
    • Operating income was $28.5 million, or 4.6% of net sales, compared to $31.5 million, or 5.3% of net sales, last year. The $3.0 million decrease in operating income was primarily due to the net SG&A increase relative to the net sales increase noted above.
    • Income tax expense was $8.7 million, or 27.9% of pre-tax income, compared to $8.9 million, or 26.2% of pre-tax income, last year. Income tax expense for fiscal 2019 includes approximately $0.5 million of discrete items related to the acceleration and expiration of certain employee stock options.
    • Net income was $22.6 million, or $0.76 per diluted share, compared to $24.9 million, or $0.84 per diluted share, last year. Of the $0.08 decline in year-over-year earnings per diluted share, approximately $0.04 was attributable to the aggregate non-recurring impact of last year's favorable legal matter resolution, negotiated expense reductions and secondary offering costs, in each case noted above. The remaining $0.04 was attributable to the net SG&A increase noted above relative to net sales growth during fiscal 2019.

    Balance Sheet and Liquidity

    As of February 1, 2020, the Company had $139.9 million of cash and marketable securities and no debt outstanding under its revolving credit facility. This compares to $144.1 million of cash and marketable securities and no debt outstanding under its revolving credit facility as of February 2, 2019. For the fourth consecutive year, the Company paid a special cash dividend to its stockholders in February 2020. This year's special cash dividend was approximately $29.7 million in the aggregate, or $1 per share.

    Fiscal 2020 First Quarter Outlook

    Through March 10, 2020, total comparable store net sales, including e-commerce, have increased by a low single-digit percentage with comparable store net sales in stores slightly negative and e-commerce net sales up high single-digits on a percentage basis. Given the unpredictability of the effects of the coronavirus on, among other things, consumer behavior, store traffic, production capabilities, timing of deliveries, our people, economic activity and the market generally in the coming weeks and months, the Company is unable to provide specific earnings guidance at this time.

    Conference Call Information

    A conference call to discuss these financial results is scheduled for today, March 12, 2020, 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) 407-4018 (domestic) or (201) 689-8471 (international) 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 March 26, 2020, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13699476. Please note participants must enter the conference identification number in order to access the replay.

    About Tillys

    Tillys is a leading, destination specialty retailer of casual apparel, footwear and accessories for young men, young women, boys and girls with an extensive selection of iconic global, emerging, and proprietary brands rooted in an active, outdoor and social lifestyle. Tillys is headquartered in Irvine, California and currently operates 239 total stores, including one RSQ-branded pop-up store, across 33 states, as well as 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 the potential near-term impacts of the coronavirus situation, 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, epidemics, pandemics, or other public health issues, and other factors that are detailed in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”), 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.

    Tilly’s, Inc.

    Consolidated Balance Sheets

    (In thousands, except par value)

    (unaudited)

       

     

     

    February 1,
    2020

     

    February 2,
    2019

    ASSETS

     

     

     

     

    Current assets:

     

     

     

     

    Cash and cash equivalents

     

    $

    70,137

     

     

    $

    68,160

     

    Marketable securities

     

    69,780

     

     

    75,919

     

    Receivables

     

    7,485

     

     

    6,082

     

    Merchandise inventories

     

    56,901

     

     

    55,809

     

    Prepaid expenses and other current assets

     

    4,561

     

     

    11,171

     

    Total current assets

     

    208,864

     

     

    217,141

     

    Operating lease assets

     

    263,649

     

     

     

    Property and equipment, net

     

    66,176

     

     

    73,842

     

    Other assets

     

    7,951

     

     

    2,185

     

    Total assets

     

    $

    546,640

     

     

    $

    293,168

     

    LIABILITIES AND STOCKHOLDERS’ EQUITY

     

     

     

     

    Current liabilities:

     

     

     

     

    Accounts payable

     

    $

    20,562

     

     

    $

    24,207

     

    Accrued expenses

     

    20,755

     

     

    18,756

     

    Deferred revenue

     

    11,761

     

     

    10,373

     

    Accrued compensation and benefits

     

    7,190

     

     

    8,930

     

    Dividends payable

     

    29,677

     

     

    29,453

     

    Current portion of operating lease liabilities

     

    55,321

     

     

     

    Current portion of deferred rent

     

     

     

    5,540

     

    Total current liabilities

     

    145,266

     

     

    97,259

     

    Noncurrent operating lease liabilities

     

    240,755

     

     

     

    Noncurrent deferred rent

     

     

     

    30,825

     

    Other

     

    718

     

     

    1,757

     

    Total liabilities

     

    386,739

     

     

    129,841

     

    Stockholders’ equity:

     

     

     

     

    Common stock (Class A)

     

    22

     

     

    21

     

    Common stock (Class B)

     

    8

     

     

    8

     

    Preferred stock

     

     

     

     

    Additional paid-in capital

     

    153,377

     

     

    149,737

     

    Retained earnings

     

    6,280

     

     

    13,335

     

    Accumulated other comprehensive income

     

    214

     

     

    226

     

    Total stockholders’ equity

     

    159,901

     

     

    163,327

     

    Total liabilities and stockholders’ equity

     

    $

    546,640

     

     

    $

    293,168

     

    Tilly’s, Inc.

    Consolidated Statements of Income

    (In thousands, except per share data)

    (unaudited)

       

     

     

    Thirteen Weeks Ended

     

    Fifty-Two Weeks Ended

     

     

    February 1,
    2020

     

    February 2,
    2019

     

    February 1,
    2020

     

    February 2,
    2019

    Net sales

     

    $

    172,479

     

     

    $

    170,612

     

     

    $

    619,300

     

     

    $

    598,478

     

    Cost of goods sold (includes buying, distribution, and occupancy costs)

     

    120,345

     

     

    118,455

     

     

    432,592

     

     

    417,582

     

    Gross profit

     

    52,134

     

     

    52,157

     

     

    186,708

     

     

    180,896

     

    Selling, general and administrative expenses

     

    43,639

     

     

    41,223

     

     

    158,253

     

     

    149,416

     

    Operating income

     

    8,495

     

     

    10,934

     

     

    28,455

     

     

    31,480

     

    Other income, net

     

    589

     

     

    856

     

     

    2,901

     

     

    2,313

     

    Income before income taxes

     

    9,084

     

     

    11,790

     

     

    31,356

     

     

    33,793

     

    Income tax expense

     

    2,811

     

     

    3,113

     

     

    8,734

     

     

    8,850

     

    Net income

     

    $

    6,273

     

     

    $

    8,677

     

     

    $

    22,622

     

     

    $

    24,943

     

    Basic income per share of Class A and Class B common stock

     

    $

    0.21

     

     

    $

    0.29

     

     

    $

    0.77

     

     

    $

    0.85

     

    Diluted income per share of Class A and Class B common stock

     

    $

    0.21

     

     

    $

    0.29

     

     

    $

    0.76

     

     

    $

    0.84

     

    Weighted average basic shares outstanding

     

    29,628

     

     

    29,451

     

     

    29,533

     

     

    29,278

     

    Weighted average diluted shares outstanding

     

    29,926

     

     

    29,836

     

     

    29,788

     

     

    29,768

     

    Tilly’s, Inc.

    Consolidated Statements of Cash Flows

    (In thousands)

    (unaudited)

       

     

     

    Fifty-Two Weeks Ended

     

     

    February 1,
    2020

     

    February 2,
    2019

    Cash flows from operating activities

     

     

     

     

    Net income

     

    $

    22,622

     

     

    $

    24,943

     

    Adjustments to reconcile net income to net cash provided by operating activities:

     

     

     

     

    Depreciation and amortization

     

    20,948

     

     

    22,485

     

    Stock-based compensation expense

     

    2,136

     

     

    2,212

     

    Impairment of assets

     

    282

     

     

    786

     

    Loss on disposal of assets

     

    908

     

     

    30

     

    Gain on sales and maturities of marketable securities

     

    (1,660

    )

     

    (1,552

    )

    Deferred income taxes

     

    (5,720

    )

     

    953

     

    Changes in operating assets and liabilities:

     

     

     

     

    Receivables

     

    3,204

     

     

    (1,730

    )

    Merchandise inventories

     

    (1,092

    )

     

    (2,783

    )

    Prepaid expenses and other assets

     

    557

     

     

    (1,641

    )

    Accounts payable

     

    (4,227

    )

     

    3,195

     

    Accrued expenses

     

    1,369

     

     

    (4,438

    )

    Accrued compensation and benefits

     

    (1,740

    )

     

    2,811

     

    Operating lease liabilities and deferred rent

     

    (2,541

    )

     

    (195

    )

    Deferred revenue

     

    1,388

     

     

    1,667

     

    Net cash provided by operating activities

     

    36,434

     

     

    46,743

     

    Cash flows from investing activities

     

     

     

     

    Purchase of property and equipment

     

    (14,299

    )

     

    (14,923

    )

    Proceeds from sale of property and equipment

     

     

     

    3

     

    Purchases of marketable securities

     

    (126,526

    )

     

    (136,198

    )

    Proceeds from marketable securities

     

    134,316

     

     

    144,859

     

    Net cash used in investing activities

     

    (6,509

    )

     

    (6,259

    )

    Cash flows from financing activities

     

     

     

     

    Dividends paid

     

    (29,453

    )

     

    (29,067

    )

    Proceeds from exercise of stock options

     

    1,590

     

     

    3,652

     

    Taxes paid in lieu of shares issued for stock-based compensation

     

    (85

    )

     

    (111

    )

    Net cash used in financing activities

     

    (27,948

    )

     

    (25,526

    )

    Change in cash and cash equivalents

     

    1,977

     

     

    14,958

     

    Cash and cash equivalents, beginning of period

     

    68,160

     

     

    53,202

     

    Cash and cash equivalents, end of period

     

    $

    70,137

     

     

    $

    68,160

     

    Tilly's, Inc.

    Store Count and Square Footage

       

     

     

    Stores
    Open at
    Beginning 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)

    2019 Q1      

     

    229

     

    1

     

    1

     

    229

     

    1,708

    2019 Q2

     

    229

     

    1

     

    1

     

    229

     

    1,710

    2019 Q3

     

    229

     

    4

     

    1

     

    232

     

    1,732

    2019 Q4

     

    232

     

    8

     

     

    240

     

    1,776

     



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    Tilly's, Inc. Announces Fiscal 2019 Fourth Quarter and Full Year Results Tilly’s, Inc. (NYSE:TLYS, the "Company") today announced financial results for the fourth quarter and full year of fiscal 2019 ended February 1, 2020. "A deeper than expected drop in store traffic and comparable store net sales during the second and …