Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Tilly's, Inc. Announces Third Quarter Operating Results Introduces Fiscal 2022 Fourth Quarter Outlook


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.
Consolidated Balance Sheets
(In thousands, except par value)
(unaudited)

 

 

October 29,
2022

 

January 29,
2022

 

October 30,
2021

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.
Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)

 

 

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

 

 

October 29,
2022

 

October 30,
2021

October 29,
2022

 

October 30,
2021

 

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.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)

 

 

Thirty-Nine Weeks Ended

 

October 29,
2022

 

October 30,
2021

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 Count and Square Footage

 

 

Store
Count at
Beginning of
Quarter

 

New Stores
Opened
During Quarter

 

Stores
Permanently
Closed
During Quarter

 

Store Count at
End of Quarter

 

Total Gross
Square Footage
End of Quarter
(in thousands)

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

 


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