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Tilly's (TLYS) Q3 Earnings Beat Estimates, Revenues Rise Y/Y

Zacks Equity Research

Shares of Tilly’s, Inc. TLYS have gained nearly 13% during the after-market trading session on Dec 4. The stock received a boost following the company’s third-quarter fiscal 2019 results. The bottom line beat the Zacks Consensus Estimate for the seventh straight quarter. Moreover, the top and the bottom line increased on a year-over-year basis.

Also, the company reported continued positive comparable store net sales with rate of growth increasing on a sequential basis. Given the encouraging performance during Thanksgiving weekend and Cyber Monday, management expects to deliver decent comparable store net sales in the fiscal fourth quarter.

Q3 Highlights

The company reported adjusted earnings of 23 cents a share that surpassed the Zacks Consensus Estimate by a couple of cents. Moreover, the figure increased 15% year over year. Meanwhile, net sales came in at $154.8 million, up 5.4% year over year and in line with the Zacks Consensus Estimate.

Comparable store net sales, which include e-commerce net sales, rose 3.1% following an increase of 0.6% in the last reported quarter and 4.3% in the year-ago quarter. Comparable store net sales in physical stores rose 2.4%. E-commerce net sales increased 7.4% and contributed approximately 14.7% to total net sales this year.

Gross margin expanded 80 basis points (bps) year over year to 30.5% during the quarter on account of higher product margins, which more than offset elevated buying, distribution and occupancy costs.

Additionally, SG&A expenses increased 7.1% to $39.5 million. This was primarily caused by higher marketing and fulfillment expenses related to e-commerce net sales growth, rise in store payroll expenses as well as store count and increased temporary labor expenses. As a percentage of sales, SG&A costs increased to 25.1% from 25.5%.

Adjusted, operating profit increased 12% year over year to $8.4 million. Moreover, adjusted operating margin expanded 30 bps to 5.4%. This growth was mainly driven by higher net sales.

Tilly's, Inc. Price, Consensus and EPS Surprise


Tilly's, Inc. Price, Consensus and EPS Surprise
Tilly's, Inc. Price, Consensus and EPS Surprise

Tilly's, Inc. price-consensus-eps-surprise-chart | Tilly's, Inc. Quote

Store Update

Notably, the company has opened four stores in the quarter and closed one. At the end of the quarter, Tilly’s had 232 total stores. The company has already opened seven new stores. It further plans to open one more store at Universal City Walk before Christmas.

Other Financial Updates

The company, which carries a Zacks Rank #4 (Sell), concluded the quarter with cash and cash equivalents of $67.6 million, marketable securities of $62.5 million and shareholders’ equity of $181.5 million. Net cash provided by operating activities for 39-week period ended Nov 2, 2019, was $24.5 million. Management expects to incur capital expenditures of nearly $19 million for fiscal 2019.


Tilly anticipates fiscal fourth-quarter net sales in the range of $179-$184 million, driven by expected comparable store net sales growth of 2-5%. The Zacks Consensus Estimate for revenues is currently pegged at $178.3 million.

Adjusted earnings per share are projected in the range of 29-32 cents. The Zacks Consensus Estimate is currently pegged at 27 cents per share. The company envisions operating income in the band of $11-$12.5 million.

Top picks

Boot Barn Holdings, Inc BOOT, with a Zacks Rank #1 (Strong Buy), has a long-term earnings per share (EPS) growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Casey's General Stores, Inc CASY, with a Zacks Rank #1, has a long-term EPS growth rate of 9.1%.

Dollar General Corporation DG, with a Zacks Rank #2 (Buy), has a long-term EPS growth rate of 11.2%.

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