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IRVINE, Calif.--(BUSINESS WIRE)--Dec 1, 2022--
Tilly’s, Inc. (NYSE: TLYS, the "Company") today announced financial results for the third quarter of fiscal 2022 ended October 29, 2022.
"Our third quarter performance was better than we expected and we entered the fourth quarter with reduced inventory per square foot compared to last year," commented Ed Thomas, President and Chief Executive Officer. "Although our November comparable net sales results were weaker than we expected, we saw an improved relative trend during the Black Friday weekend compared to earlier in the month. We are being cautious in our expectations for the fourth quarter, but believe we have the strategies in place to achieve improved performance in fiscal 2023."
Operating Results Overview
It should be noted that the Company's operating results for the comparative periods last year were fueled by unprecedented pent-up consumer demand and the impact of stimulus payments resulting from the pandemic, producing Company-record results for net sales, gross margin, operating income and earnings per share for the third quarter and first thirty-nine weeks of fiscal 2021.
Fiscal 2022 Third Quarter Operating Results Overview
The following comparisons refer to the Company's operating results for the third quarter of fiscal 2022 ended October 29, 2022 versus the third quarter of fiscal 2021 ended October 30, 2021.
Fiscal 2022 Year-to-Date Operating Results Overview
The following comparisons refer to the Company's operating results for the first thirty-nine weeks of fiscal 2022 ended October 29, 2022 versus the first thirty-nine weeks of fiscal 2021 ended October 30, 2021.
Balance Sheet and Liquidity
As of October 29, 2022, the Company had $105.8 million of cash and marketable securities and no debt outstanding compared to $155.6 million and no debt outstanding at the end of the third quarter last year. Since the end of last year's third quarter, the Company paid cash dividends to stockholders of $30.9 million in December 2021 and repurchased 1,258,330 shares of its common stock for a total of $10.9 million pursuant to its previously-announced stock repurchase program.
The Company ended the third quarter with inventories per square foot down 6.9% compared to last year, a significant improvement from being up 4.1% relative to last year at the end of this year's second quarter.
Total year-to-date capital expenditures at the end of the third quarter were $11.9 million this year compared to $10.9 million last year. For fiscal 2022 as a whole, the Company expects its total capital expenditures to be approximately $19 million inclusive of 11 new store openings.
Fiscal 2022 Fourth Quarter Outlook
Total comparable net sales through November 29, 2022, including both physical stores and e-com, decreased by 18.5% relative to the comparable period last year. For Thanksgiving weekend, Thursday through Cyber Monday, total comparable net sales decreased by 13.4% compared to last year. Based on these results, current and historical trends, and anticipating that fourth quarter sales performance will revert to a more traditional holiday cadence, including being the largest sales quarter of the year, the Company currently estimates that its fiscal 2022 fourth quarter net sales will be in the range of approximately $183 million to $188 million. The Company currently expects SG&A expenses to be in the range of approximately $54 million to $55 million, pre-tax income to be in the range of approximately $0.8 million to $2.6 million, and estimated income tax rate to be approximately 27%. The Company currently expects its earnings per diluted share to be in the range of $0.02 to $0.06 based on estimated weighted average diluted shares of approximately 29.9 million. This compares to $204.5 million in net sales and $0.38 in earnings per diluted share for the fourth quarter of last year.
The current business environment remains subject to many unpredictable risks and uncertainties including with respect to, among others, the current inflationary environment, continuing supply chain difficulties, labor challenges, the COVID-19 pandemic, geopolitical concerns, and how consumer behavior may change relative to any of these factors as well as last year's historical anomalies of pent-up demand coming out of pandemic-related restrictions and federal stimulus payments. As a result, the Company's estimates concerning its projected business performance may change at any time and there can be no guarantee that the Company's current estimates will be accurate.
Fiscal 2023 Capital Expenditure Plans
The Company currently expects its total capital expenditures for fiscal 2023 not to exceed $25 million, inclusive of up to 15 new stores and upgrades to certain distribution and information technology systems.
Conference Call Information
A conference call to discuss these financial results is scheduled for today, December 1, 2022, 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). 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 December 8, 2022, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13734299.
About Tillys
Tillys is a leading, destination specialty retailer of casual apparel, footwear, accessories and hardgoods 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 249 total stores across 33 states, as well as its website, www.tillys.com.
Forward-Looking Statements
Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements regarding the overall effect of the novel coronavirus (COVID-19) pandemic, including its impacts on us, our operations, or our future financial condition or operating results, our current operating expectations in light of historical results, expectations regarding customer traffic, our supply chain, and inflation, our ability to properly manage our inventory levels, and any other statements about our future cash position, financial flexibility, 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, the effects of the COVID-19 pandemic (including any surges in the number of cases related thereto, or other weather, epidemics, pandemics, or other public health issues), supply chain difficulties, and inflation on our business and operations, and our ability to respond thereto, 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, attract talented employees, enhance awareness of our brand and brand image, general consumer spending patterns and levels, the markets generally, our ability to satisfy our financial obligations, including under our credit facility and our leases, 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 on the SEC’s website at www.sec.gov and on 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. | |||||||||
| October 29, |
| January 29, |
| October 30, | ||||
ASSETS |
|
|
|
|
| ||||
Current assets: |
|
|
|
|
| ||||
Cash and cash equivalents | $ | 75,786 |
| $ | 42,201 |
|
| $ | 59,392 |
Marketable securities |
| 29,985 |
|
| 97,027 |
|
|
| 96,237 |
Receivables |
| 11,352 |
|
| 6,705 |
|
|
| 8,881 |
Merchandise inventories |
| 81,589 |
|
| 65,645 |
|
|
| 86,692 |
Prepaid expenses and other current assets |
| 16,036 |
|
| 16,400 |
|
|
| 9,682 |
Total current assets |
| 214,748 |
|
| 227,978 |
|
|
| 260,884 |
Operating lease assets |
| 222,664 |
|
| 216,508 |
|
|
| 226,547 |
Property and equipment, net |
| 51,279 |
|
| 47,530 |
|
|
| 49,392 |
Deferred tax assets |
| 10,261 |
|
| 11,446 |
|
|
| 11,894 |
Other assets |
| 1,488 |
|
| 1,361 |
|
|
| 1,520 |
TOTAL ASSETS | $ | 500,440 |
| $ | 504,823 |
|
| $ | 550,237 |
|
|
|
|
|
| ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||||
Current liabilities: |
|
|
|
|
| ||||
Accounts payable | $ | 30,225 |
| $ | 28,144 |
|
| $ | 46,378 |
Accrued expenses |
| 17,239 |
|
| 19,073 |
|
|
| 20,084 |
Deferred revenue |
| 13,859 |
|
| 17,096 |
|
|
| 13,568 |
Accrued compensation and benefits |
| 9,756 |
|
| 17,056 |
|
|
| 17,106 |
Current portion of operating lease liabilities |
| 50,047 |
|
| 51,504 |
|
|
| 51,717 |
Current portion of operating lease liabilities, related party |
| 2,771 |
|
| 2,533 |
|
|
| 2,582 |
Other liabilities |
| 806 |
|
| 761 |
|
|
| 727 |
Total current liabilities |
| 124,703 |
|
| 136,167 |
|
|
| 152,162 |
Long-term liabilities: |
|
|
|
|
| ||||
Noncurrent portion of operating lease liabilities |
| 176,621 |
|
| 171,965 |
|
|
| 182,700 |
Noncurrent portion of operating lease liabilities, related party |
| 23,129 |
|
| 21,000 |
|
|
| 21,625 |
Other liabilities |
| 455 |
|
| 978 |
|
|
| 1,112 |
Total long-term liabilities |
| 200,205 |
|
| 193,943 |
|
|
| 205,437 |
Total liabilities |
| 324,908 |
|
| 330,110 |
|
|
| 357,599 |
Stockholders’ equity: |
|
|
|
|
| ||||
Common stock (Class A) |
| 23 |
|
| 24 |
|
|
| 24 |
Common stock (Class B) |
| 7 |
|
| 7 |
|
|
| 7 |
Preferred stock |
| — |
|
| — |
|
|
| — |
Additional paid-in capital |
| 168,749 |
|
| 166,929 |
|
|
| 165,983 |
Retained earnings |
| 6,634 |
|
| 7,754 |
|
|
| 26,616 |
Accumulated other comprehensive income (loss) |
| 119 |
|
| (1 | ) |
|
| 8 |
Total stockholders’ equity |
| 175,532 |
|
| 174,713 |
|
|
| 192,638 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 500,440 |
| $ | 504,823 |
|
| $ | 550,237 |
Tilly’s, Inc. | |||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended |
| ||||||||||
| October 29, |
| October 30, | October 29, |
| October 30, |
| ||||||
Net sales | $ | 177,847 |
| $ | 206,096 |
| $ | 491,930 |
| $ | 571,205 |
|
|
|
|
|
|
|
|
|
| ||||||
Cost of goods sold (includes buying, distribution, and occupancy costs) |
| 122,346 |
|
| 128,612 |
|
| 338,870 |
|
| 362,751 |
|
|
Rent expense, related party |
| 918 |
|
| 745 |
|
| 2,680 |
|
| 2,149 |
|
|
Total cost of goods sold (includes buying, distribution, and occupancy costs) |
| 123,264 |
|
| 129,357 |
|
| 341,550 |
|
| 364,900 |
|
|
Gross profit |
| 54,583 |
|
| 76,739 |
|
| 150,380 |
|
| 206,305 |
|
|
|
|
|
|
|
|
|
| ||||||
Selling, general and administrative expenses |
| 48,134 |
|
| 47,609 |
|
| 137,405 |
|
| 135,607 |
|
|
Rent expense, related party |
| 134 |
|
| 133 |
|
| 400 |
|
| 400 |
|
|
Total selling, general and administrative expenses |
| 48,268 |
|
| 47,742 |
|
| 137,805 |
|
| 136,007 |
|
|
|
|
|
|
|
|
|
| ||||||
Operating income |
| 6,315 |
|
| 28,997 |
|
| 12,575 |
|
| 70,298 |
|
|
Other income (expense), net |
| 675 |
|
| (1 | ) |
| 862 |
|
| (219 | ) |
|
Income before income taxes |
| 6,990 |
|
| 28,996 |
|
| 13,437 |
|
| 70,079 |
|
|
Income tax expense |
| 1,841 |
|
| 8,162 |
|
| 3,656 |
|
| 17,888 |
|
|
Net income | $ | 5,149 |
| $ | 20,834 |
| $ | 9,781 |
| $ | 52,191 |
|
|
Basic earnings per share of Class A and Class B common stock | $ | 0.17 |
| $ | 0.67 |
| $ | 0.32 |
| $ | 1.72 |
|
|
Diluted earnings per share of Class A and Class B common stock | $ | 0.17 |
| $ | 0.66 |
| $ | 0.32 |
| $ | 1.68 |
|
|
Weighted average basic shares outstanding |
| 29,894 |
|
| 30,915 |
|
| 30,226 |
|
| 30,429 |
|
|
Weighted average diluted shares outstanding |
| 30,050 |
|
| 31,352 |
|
| 30,428 |
|
| 31,016 |
|
|
Tilly’s, Inc. | |||||||
| Thirty-Nine Weeks Ended | ||||||
| October 29, |
| October 30, | ||||
Cash flows from operating activities |
|
|
| ||||
Net income | $ | 9,781 |
|
| $ | 52,191 |
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
| ||||
Depreciation and amortization |
| 10,515 |
|
|
| 13,123 |
|
Insurance proceeds from casualty loss |
| — |
|
|
| 117 |
|
Stock-based compensation expense |
| 1,764 |
|
|
| 1,417 |
|
Impairment of assets |
| 14 |
|
|
| 136 |
|
Loss on disposal of assets |
| 64 |
|
|
| 52 |
|
Gain on sales and maturities of marketable securities |
| (230 | ) |
|
| (101 | ) |
Deferred income taxes |
| 1,167 |
|
|
| 57 |
|
Changes in operating assets and liabilities: |
|
|
| ||||
Receivables |
| (705 | ) |
|
| 1,847 |
|
Merchandise inventories |
| (15,944 | ) |
|
| (31,111 | ) |
Prepaid expenses and other assets |
| 557 |
|
|
| (3,698 | ) |
Accounts payable |
| 2,068 |
|
|
| 21,402 |
|
Accrued expenses |
| (4,253 | ) |
|
| (9,804 | ) |
Accrued compensation and benefits |
| (7,300 | ) |
|
| 7,207 |
|
Operating lease liabilities |
| (4,637 | ) |
|
| (5,205 | ) |
Deferred revenue |
| (3,237 | ) |
|
| 76 |
|
Other liabilities |
| (706 | ) |
|
| (856 | ) |
Net cash (used in) provided by operating activities |
| (11,082 | ) |
|
| 46,850 |
|
|
|
|
| ||||
Cash flows from investing activities |
|
|
| ||||
Proceeds from maturities of marketable securities |
| 117,189 |
|
|
| 95,224 |
|
Purchases of marketable securities |
| (49,779 | ) |
|
| (126,420 | ) |
Purchases of property and equipment |
| (11,897 | ) |
|
| (10,911 | ) |
Proceeds from sale of property and equipment |
| — |
|
|
| 17 |
|
Insurance proceeds from casualty loss |
| — |
|
|
| 29 |
|
Net cash provided by (used in) investing activities |
| 55,513 |
|
|
| (42,061 | ) |
|
|
|
| ||||
Cash flows from financing activities |
|
|
| ||||
Share repurchases related to share repurchase program |
| (10,902 | ) |
|
| — |
|
Proceeds from exercise of stock options |
| 56 |
|
|
| 9,129 |
|
Dividends paid |
| — |
|
|
| (30,710 | ) |
Net cash used in financing activities |
| (10,846 | ) |
|
| (21,581 | ) |
|
|
|
| ||||
Change in cash and cash equivalents |
| 33,585 |
|
|
| (16,792 | ) |
Cash and cash equivalents, beginning of period |
| 42,201 |
|
|
| 76,184 |
|
Cash and cash equivalents, end of period | $ | 75,786 |
|
| $ | 59,392 |
|
Tilly's, Inc. | |||||||||
| Store |
| New Stores |
| Stores |
| Store Count at |
| Total Gross |
2021 Q1 | 238 |
| 2 |
| 2 |
| 238 |
| 1,753 |
2021 Q2 | 238 |
| 6 |
| — |
| 244 |
| 1,788 |
2021 Q3 | 244 |
| — |
| 1 |
| 243 |
| 1,781 |
2021 Q4 | 243 |
| 1 |
| 3 |
| 241 |
| 1,764 |
2022 Q1 | 241 |
| — |
| — |
| 241 |
| 1,764 |
2022 Q2 | 241 |
| 2 |
| 1 |
| 242 |
| 1,767 |
2022 Q3 | 242 |
| 5 |
| — |
| 247 |
| 1,800 |
View source version on businesswire.com:https://www.businesswire.com/news/home/20221201005877/en/
CONTACT: Investor Relations:
Michael Henry, Executive Vice President, Chief Financial Officer
(949) 609-5599, ext. 17000
irelations@tillys.com
KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: RETAIL RESTAURANT/BAR FOOD/BEVERAGE
SOURCE: Tilly’s, Inc.
Copyright Business Wire 2022.
PUB: 12/01/2022 04:05 PM/DISC: 12/01/2022 04:06 PM
http://www.businesswire.com/news/home/20221201005877/en