Earnings Highlights and Review: Tilly's Outperformed Top- and Bottom-line Expectations
Research Desk Line-up: Guess' Post Earnings Coverage
LONDON, UK / ACCESSWIRE / June 13, 2017 / Pro-Trader Daily publishes post-earnings coverage on Tilly's, Inc. (NYSE: TLYS) following the Company's posting of its first quarter of fiscal 2017 earnings results on May 23, 2017. The clothing and accessories retailer reported a marginal increase in revenue while its net loss narrowed on a y-o-y basis. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Earnings Reviewed
For the thirteen week of fiscal 2017 ended April 29, 2017, Tilly's total net sales were $120.9 million, up 0.6% from net sales $120.2 million in Q1 FY16. The Company's reported numbers exceeded analysts' estimates of $114.4 million.
For Q1 2017, Tilly's comparable store sales (comps), which include ecommerce sales, grew 0.6% in the reported quarter. The Company's store comps were almost flat on store traffic that grew 1% on a y-o-y basis. Tilly's ecommerce sales increased 6% and represented 13.4% of its total sales for Q1 2017 versus 12.7% in the year ago comparable period. In the reported quarter, the Company's store count dropped to 222 from 224 in the prior year's same period.
During Q1 2017, Tilly's gross margin, or gross profit as a percentage of net sales, increased to 27.2% from 27.1% in Q1 2016 with gain in gross margin attributable to an 80 basis point reduction in buying, distribution, and occupancy costs, offset by a 70 basis point decline in product margins from increased markdowns.
For Q1 2017, Tilly's selling, general, and administrative expenses ("SG&A") totaled $33.2 million, a decrease of $3.3 million from $36.6 million in Q1 2016. As a percentage of net sales, SG&A improved 290 basis points to 27.5% in the reported quarter from 30.4% in the year ago period. Tilly's operating loss was $0.3 million, or 0.3% of net sales, in Q1 2017 compared to an operating loss of $4.0 million, or 3.3% of net sales, in Q1 2016. The 300 basis point improvement in operating margin was primarily attributable to the reductions in SG&A.
Tilly's net loss narrowed to $0.2 million, or $0.01 per share, for Q1 2017 compared to a net loss of $2.7 million, or $0.10 per share, for Q1 2016. The Company's reported numbers were better than Wall Street's expectations for a loss of $0.10 per share.
"We believe our initiatives are gaining traction. After a tough February, our combined March/April comparable store sales were up 5.3%, resulting in a positive comparable store sales result for the first quarter as a whole and our fourth consecutive quarter of year-over-year operating income improvement," commented Ed Thomas, the Company's President and Chief Executive Officer.
Balance Sheet and Liquidity
As of April 29, 2017, Tilly's had $105.6 million of cash and marketable securities, a 19.5% increase compared to $88.4 million of cash and marketable securities as of April 30, 2016, despite having paid the first-ever special cash dividend to stockholders of $20.1 million in the aggregate from cash on hand during February 2017. The Company had no debt under its recently renewed credit facility. During Q1 2017, Tilly's inventory decreased 6.8% on a per square foot basis. Tilly's capital expenditures for the reported quarter were $3 million compared to $4.3 million in the year ago same period.
Outlook
Based on current trends, Tilly's is forecasting Q2 2017 comparable store sales to be in the range of flat to up low single-digits, operating income to be in the band of $1.2 million to $3.5 million, and income per diluted share to be in the range of $0.03 to $0.07.
Stock Performance
At the closing bell, on Monday, June 12, 2017, the stock was marginally up 0.48%, ending the trading session at $10.37. A total volume of 100.12 thousand shares have exchanged hands. Tilly's stock price skyrocketed 4.54% in the last one month, 3.29% in the past three months, and 82.79% in the previous twelve months. The stock is trading at a PE ratio of 21.21 and currently has a market cap of $302.60 million.
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