Shares of Tilly's Inc (NYSE: TLYS) tumbled after the casual apparel, footwear and accessories company disappointed investors in its fiscal first-quarter earnings report, but Bank of America remains a bull ahead of sales and earnings acceleration in the back half of the year.
Bank of America's David Buckley maintains a Buy rating on Tilly's with a price target lowered from $14 to $13.
Tilly's saw a slow start to its first quarter but Wednesday's earnings report showed comp growth of 2.4 percent and in-line EPS of 2 cents, Buckley wrote in a note. The online business performed well as e-commerce sales increased by 30 percent and now accounts for 15 percent of total sales.
Quarter-to-date trends are off to a slow start with a 6.6-percent decline in traffic. The analyst said this trend is consistent with what is seen in the broader retail sector but the business should turn around. Specifically, weather improvements in Florida and the Northeast region is a "promising sign" sales could improve from the normalization of weather.
As such, sales growth is likely to accelerate from 2 percent in the first half of the year to 6 percent from a combination of 4 percent store growth (11 new stores set to open) while e-commerce growth could slow down but still increase at a 15-30 percent rate.
Tilly's traded lower by 12 percent to $8.90 per share Thursday morning.
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