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Tilly's (TLYS) Q2 Earnings & Sales Top Estimates, Increase Y/Y

·5 min read

Tilly’s, Inc. TLYS reported stellar second-quarter fiscal 2021 results wherein both sales and earnings outpaced the Zacks Consensus Estimate and improved year over year. The company posted earnings per share of 66 cents, which beat the consensus estimate of 50 cents and significantly grew from 18 cents a share earned in the year-earlier quarter. Higher sales and margins aided the bottom-line performance.

Total net sales of $202 million came above the Zacks Consensus Estimate of $198 million. The top line also increased 48.7% year over year, buoyed by higher sales from physical stores. Net sales from physical stores came in at $164.6 million and surged 96.3% year over year on robust product offering and the impacts of various periods of government-mandated store closures during the prior-year quarter. The metric from stores accounted for 81.5% of the overall net sales, up from 61.7% recorded last year.

We note that the total comparable net sales increased 18.3% from the second-quarter fiscal 2019 reading. Comparable net sales from physical stores grew 11%, backed by increases at all the geographic markets.

Tillys, Inc. Price, Consensus and EPS Surprise

Tillys, Inc. Price, Consensus and EPS Surprise
Tillys, Inc. Price, Consensus and EPS Surprise

Tillys, Inc. price-consensus-eps-surprise-chart | Tillys, Inc. Quote

E-commerce sales decreased 28.2% to $37.3 million, mainly due to the anniversary of the prior year's triple-digit e-commerce sales growth in May and June when stores were closed. E-commerce sales constituted for 18.5% of total net sales compared with 38.3% seen last year.

Margins & Costs

The company reported a gross profit of $74.7 million, up 79.1% year over year. Gross margin increased 630 basis points (bps) to 37%. Buying, distribution and occupancy costs increased 800 bps while product margins contracted 170 bps as a rate of sales.

Selling, general and administrative expenses (SG&A) jumped 42.1% year over year to $48.3 million due to higher store payroll and related benefits, mainly on account of the operation of all stores throughout the quarter. As a rate of sales, the metric improved 110 bps to 23.9%

Operating income climbed significantly to $26.4 million from $7.7 million recorded in the year-earlier quarter. Also, operating margin rose to 13.1% from 5.7% posted in the year-ago quarter, mainly owing to higher sales and gross margin.

Other Financials

Tilly's ended the quarter with cash and cash equivalents of $81.9 million with no outstanding debt and total shareholders’ equity of $171.2 million.

Merchandise inventories increased 27.6% year over year to $86.9 million during the fiscal second quarter. Capital expenditures totaled $8.5 million in the aforementioned period.

During the first half of fiscal 2021, the presently Zacks Rank #1 (Strong Buy) company generated cash of $37.4 million from operating activities.

On Jul 9, 2021, management paid out aggregate special cash dividends of $30.7 million to all Class A and Class B stockholders of record on Jun 25.

In the fiscal second quarter, the company introduced six stores. Tilly's ended the reported quarter with 244 total stores compared with 238 stores at the end of the year-earlier quarter. We note that management expects to have 243 stores open at the end of the fiscal third quarter compared with 238 at the end of the year-ago quarter.

Outlook

Management informed that the overall comparable net sales for the fiscal month ended Aug 28, 2021, jumped 20.4% from the same-period level of fiscal 2019. This includes comparable growth of 11.6% from physical stores and an 81% rise at e-commerce.

Depending on the current and historical trends as well as the assumption that all its stores and e-commerce will be operational throughout the third quarter, management projects net sales between $187 million and $193 million for the said period. Also, earnings per share are envisioned in the band of 30-34 cents, up from 7 cents recorded in the year-earlier quarter. The Zacks Consensus Estimate for third-quarter earnings is currently pegged at 24 cents, which is likely to witness higher revisions in the coming days.

Price Performance

Shares of this apparel and accessories retailer have increased 47.1% in the past six months against the industry’s 4% dip.

More Hot Stocks in Retail

Abercrombie ANF has a long-term earnings growth rate of 18% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hibbett HIBB presently has a long-term earnings growth rate of 22.4% and a Zacks Rank #2 (Buy).

Gap GPS, currently a Zacks #2 Ranked stock, has a long-term earnings growth rate of 12%.


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