Tilly’s, Inc. (NYSE: TLYS, the "Company") today announced
financial results for the fourth quarter and full 2021 fiscal year
ended January 29, 2022.
"Each quarter of fiscal 2021 set Company records for net sales
and operating income. Our fourth quarter comparable net sales grew
by 12.5% and our earnings per share of $0.38 represented our best
fourth quarter earnings in our public company history. I am very
proud of the dedication and hard work put in by our store,
distribution and corporate office teams," commented Ed Thomas,
President and Chief Executive Officer. "Fiscal 2022 is off to a
good start, but our comparisons to last year will get much tougher
as we begin to anniversary last year's pent-up demand and federal
stimulus payments."
Fiscal 2021 Fourth Quarter Results Overview
The following comparisons refer to operating results for the
fourth quarter of fiscal 2021 versus the fourth quarter of fiscal
2020 ended January 30, 2021:
- Total net sales were $204.5 million, an increase of $26.6
million or 14.9%, compared to $177.9 million last year. Total
comparable net sales, including both physical stores and
e-commerce, increased by 12.5% compared to last year.
- Net sales from physical stores were $152.2 million, an increase
of $29.6 million or 24.2%, compared to $122.5 million last year.
Comparable net sales from physical stores increased by 20.7%. Net
sales from stores represented 74.4% of total net sales compared to
68.9% of total net sales last year. The Company ended fiscal 2021
with 241 total stores compared to 238 total stores at the end of
fiscal 2020.
- Net sales from e-commerce were $52.3 million, a decrease of
$(3.1) million or (5.6)% compared to $55.4 million last year.
E-commerce net sales represented 25.6% of total net sales compared
to 31.1% of total net sales last year. Consumer behavior in 2021
favored stores over e-commerce relative to last year during which
stores were more constricted in operating hours and customer
occupancy limits than this year.
- Gross profit was $70.4 million, an increase of $12.1 million or
20.8%, compared to $58.3 million last year. Gross margin, or gross
profit as a percentage of net sales, was 34.4%, an improvement of
170 basis points compared to 32.7% last year. Total buying,
distribution and occupancy costs improved by 190 basis points
collectively, despite increasing by $1.9 million in total, due to
leveraging these costs against higher net sales. Product margins
decreased by 20 basis points as a percentage of net sales primarily
due to an increase in sales return reserves and less favorable
inventory shrink results than last year, the combination of which
more than offset a lower markdown rate compared to last year.
- Selling, general and administrative expenses ("SG&A") were
$53.1 million, or 25.9% of net sales, compared to $44.1 million, or
24.8% of net sales, last year. SG&A deleveraged 110 basis
points as a percentage of net sales and increased by $8.9 million
compared to last year. Of the $8.9 million increase in SG&A,
$4.5 million was attributable to store payroll and related benefits
primarily due to serving significantly higher sales, $1.7 million
was attributable to marketing expenses primarily due to increased
e-commerce marketing, and corporate bonus accruals of $0.6 million
due to the Company's strong operating performance in fiscal
2021.
- Operating income was $17.3 million, or 8.5% of net sales,
compared to $14.1 million, or 7.9% of net sales, last year. The
$3.2 million increase in operating income was primarily due to the
combined impact of the factors noted above.
- Income tax expense was $4.9 million, or 28.7% of pre-tax
income, compared to $5.1 million, or 36.6% of pre-tax income, last
year. The decrease in the effective income tax rate was primarily
due to a normalization of the tax rate after last year's effective
tax rate was distorted by low pre-tax losses for the year.
- Net income was $12.1 million, or $0.38 per diluted share,
compared to $8.9 million, or $0.29 per diluted share, last year.
Weighted average shares were 31.4 million this year compared to
30.1 million last year.
Fiscal 2021 Full Year Results Overview
The following comparisons refer to operating results for the
fifty-two weeks of fiscal 2021 versus the fifty-two weeks of fiscal
2020:
- Total net sales were $775.7 million, an increase of $244.4
million or 46.0%, compared to $531.3 million last year primarily
due to the various periods of government-mandated store closures,
reduced store operating hours, and restrictions on customer traffic
into physical stores last year resulting from the COVID-19
pandemic.
- Net sales from physical stores were $609.7 million, an increase
of $251.8 million or 70.4%, compared to $357.9 million last year.
Net sales from stores represented 78.6% of total net sales compared
to 67.4% of total net sales last year.
- Net sales from e-commerce were $165.9 million, a decrease of
$(7.5) million or (4.3)%, compared to $173.4 million last year.
E-commerce net sales represented 21.4% of total net sales compared
to 32.6% of total net sales last year.
- Gross profit was $276.7 million, an increase of $134.5 million
or 94.6%, compared to $142.2 million last year. Gross margin was
35.7%, an improvement of 890 basis points as a percentage of net
sales, compared to 26.8% last year. Total buying, distribution and
occupancy costs improved by 760 basis points collectively, despite
increasing by $7.8 million in total, due to leveraging these costs
against higher net sales. Product margins improved 130 basis points
as a percentage of net sales primarily due to reduced total
markdowns.
- SG&A expenses were $189.1 million, or 24.4% of net sales,
compared to $145.2 million, or 27.3% of net sales, last year.
SG&A improved by 290 basis points as a percentage of net sales
compared to last year, despite increasing by $43.8 million, due to
leveraging these expenses on higher total net sales. Of the $43.8
million increase in SG&A, $28.5 million was attributable to
store payroll and related benefits primarily due to operating all
stores for the entirety of the current year and serving
significantly higher sales, $6.6 million was attributable to
corporate bonus accruals associated with strong operating
performance in fiscal 2021, $3.9 million was attributable to
marketing expenses primarily due to increased e-commerce marketing,
$2.7 million was attributable to increased credit card fees on
higher sales volume, and $2.5 million was attributable to increased
corporate payroll and related benefits due to being more fully
staffed this year compared to significant furloughs during last
year's store shutdown period. Partially offsetting these SG&A
increases is a net year-to-date decrease of $3.4 million
attributable to a $1.7 million disputed California sales tax
assessment originally recorded in the third quarter of fiscal 2020,
which was subsequently resolved in the Company's favor and reversed
in the first quarter of fiscal 2021.
- Operating income was $87.6 million, or 11.3% of net sales,
compared to an operating loss of $(3.0) million, or (0.6)% of net
sales, last year, as a result of the combined impact of the factors
described above.
- Income tax expense was $22.8 million, or 26.2% of pre-tax
income, compared to income tax benefit of $(1.3) million, or 53.5%
of pre-tax loss, last year. The decrease in the effective income
tax rate was primarily due to a normalization of the tax rate after
last year's effective tax rate was distorted by low pre-tax losses
for the year.
- Net income was $64.2 million, or $2.06 per diluted share,
compared to a net loss of $(1.1) million, or $(0.04) per basic
share, last year. Weighted average diluted shares were 31.1 million
this year compared to 29.7 million basic shares last year.
Balance Sheet and Liquidity
As of January 29, 2022, the Company had $139.2 million of cash
and marketable securities and no debt outstanding. This compares to
$141.1 million in cash and marketable securities with no debt
outstanding as of January 30, 2021. On December 15, 2021, the
Company paid aggregate special cash dividends of $30.9 million, or
$1.00 per share, to all Class A and Class B common stockholders of
record as of December 7, 2021. The Company ended fiscal 2021 with
merchandise inventories per square foot up 17.0% compared to last
year as the Company seeks to support the current momentum of its
business and position itself for the Spring season amid the ongoing
supply chain challenges. As of March 6, 2022, merchandise
inventories were up 7.3% in total compared to last year.
Fiscal 2022 First Quarter Outlook
Through March 6, 2022, the Company's fiscal 2022 first quarter
total comparable net sales, including both physical stores and
e-commerce, increased by 10.4% compared to the comparable period of
2021 with an increase in net sales from physical stores of 14.0%
and a decrease from e-commerce net sales of (1.3)%. Comparable net
sales for fiscal February 2022 increased by a double-digit
percentage, but have been negative through March 6.
During March 2021, our net sales accelerated significantly
primarily as a result of considerable pent-up demand coming out of
2020's pandemic-related restrictions and significant federal
stimulus payments injected into the economy, both of which were
historic anomalies. As a result, the Company anticipates a further
deceleration in its comparable net sales results as the first
quarter of fiscal 2022 progresses compared to fiscal 2021,
particularly as the Company begins to anniversary last year's peak
performance in the latter half of the first quarter which was
driven by the unique environment at that time.
Based on current and historical trends, the Company currently
estimates that its total net sales will be in the range of $143
million to $148 million for the first quarter of fiscal 2022, which
translates to a comparable net sales decrease of 10% to 13%
relative to the first quarter of fiscal 2021. The Company
anticipates its earnings per diluted share for the first quarter of
fiscal 2022 will be in the range of break-even to $0.05, assuming
an estimated income tax rate of 27% and estimated weighted average
diluted shares of 31.6 million.
The current business environment remains subject to many
unpredictable risks and uncertainties including with respect to,
among others, the COVID-19 pandemic, the current inflationary
environment, continuing supply chain difficulties, labor
challenges, geopolitical concerns, and how consumer behavior may
change relative to any of these factors as well as last year's
historic 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.
For the first quarter of fiscal 2021, the Company reported total
net sales of $163 million and earnings per diluted share of $0.36,
both of which were first quarter records for the Company by a
considerable margin. For the pre-pandemic first quarter of fiscal
2019, the Company reported total net sales of $130 million and
earnings per diluted share of $0.02.
Fiscal 2022 New Store and Capital Expenditure Plans
During fiscal 2022, we currently plan to open approximately 15
to 20 new stores within existing markets, primarily in California,
Texas and the Northeast, assuming we are able to negotiate what we
believe to be acceptable lease economics. We will also make
investments in website and mobile app upgrades, information
technology infrastructure investments, and distribution
efficiencies. We are also presently evaluating potential investment
options for expanding our distribution capacity to support our
long-term growth.
Conference Call Information
A conference call to discuss these financial results in more
detail is scheduled for today, March 10, 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) at 4:25 p.m. ET (1:25 p.m. PT). 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 through March
17, 2022, by dialing (844) 512-2921 (domestic) or (412) 317-6671
(international). Please note participants must enter the conference
identification number of 13726989 in order to access the
replay.
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 241 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, the actions taken or to be taken in response to
the COVID-19 pandemic, and the impacts thereof on us, our
operations, or our future financial condition or operating results,
expectations regarding customer traffic and sales activities once
stores have reopened, the effects of guidance from local, state and
federal governments and health organizations on our future business
operations, the possibility of repaying withheld store rents, 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 (or other
weather, epidemics, pandemics, or other public health issues) on
our business and operations, and our ability to respond thereto
(including any surges in the number of cases related 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, realize anticipated, 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 from the
SEC’s website at www.sec.gov and from 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)
January 29,
2022
January 30,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
42,201
$
76,184
Marketable securities
97,027
64,955
Receivables
6,705
8,724
Merchandise inventories
65,645
55,698
Prepaid expenses and other current
assets
16,400
6,170
Total current assets
227,978
211,731
Operating lease assets
216,508
229,864
Property and equipment, net
47,530
52,639
Other assets
12,807
13,222
Total assets
$
504,823
$
507,456
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
28,144
$
24,983
Accrued expenses
19,073
30,682
Deferred revenue
17,096
13,492
Accrued compensation and benefits
17,056
9,899
Current portion of operating lease
liabilities
54,037
54,503
Other
761
632
Total current liabilities
136,167
134,191
Noncurrent operating lease liabilities
192,965
211,292
Other
978
1,351
Total liabilities
330,110
346,834
Stockholders’ equity:
Common stock (Class A)
24
22
Common stock (Class B)
7
8
Preferred stock
—
—
Additional paid-in capital
166,929
155,437
Retained earnings
7,754
5,135
Accumulated other comprehensive (loss)
income
(1
)
20
Total stockholders’ equity
174,713
160,622
Total liabilities and stockholders’
equity
$
504,823
$
507,456
Tilly’s, Inc.
Consolidated Statements of
Income (Loss)
(In thousands, except per share
data)
(unaudited)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
January 29, 2022
January 30, 2021
January 29, 2022
January 30, 2021
Net sales
$
204,489
$
177,920
$
775,694
$
531,329
Cost of goods sold (includes buying,
distribution, and occupancy costs)
134,131
119,658
499,031
389,139
Gross profit
70,358
58,262
276,663
142,190
Selling, general and administrative
expenses
53,061
44,148
189,068
145,230
Operating income (loss)
17,297
14,114
87,595
(3,040
)
Other (expense) income, net
(375
)
(111
)
(594
)
581
Income (loss) before income taxes
16,922
14,003
87,001
(2,459
)
Income tax expense (benefit)
4,864
5,132
22,752
(1,314
)
Net income (loss)
$
12,058
$
8,871
$
64,249
$
(1,145
)
Basic income (loss) per share of Class A
and Class B common stock
$
0.39
$
0.30
$
2.10
$
(0.04
)
Diluted income (loss) per share of Class A
and Class B common stock
$
0.38
$
0.29
$
2.06
$
(0.04
)
Weighted average basic shares
outstanding
30,953
29,711
30,560
29,697
Weighted average diluted shares
outstanding
31,402
30,115
31,118
29,697
Tilly’s, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(unaudited)
Fifty-Two Weeks Ended
January 29,
2022
January 30,
2021
Cash flows from operating
activities
Net income (loss)
$
64,249
$
(1,145
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
16,836
19,055
Insurance proceeds from casualty loss
117
—
Stock-based compensation expense
1,920
2,036
Impairment of long-lived assets
136
955
Loss on disposal of assets
74
87
Gain on sales and maturities of marketable
securities
(132
)
(714
)
Deferred income taxes
503
(4,949
)
Changes in operating assets and
liabilities:
Receivables
4,023
96
Merchandise inventories
(10,064
)
1,203
Prepaid expenses and other current
assets
(10,275
)
(1,722
)
Accounts payable
3,168
5,020
Accrued expenses
(10,194
)
10,600
Accrued compensation and benefits
7,157
2,709
Operating lease liabilities
(7,008
)
3,141
Deferred revenue
3,604
1,731
Other liabilities
(712
)
794
Net cash provided by operating
activities
63,402
38,897
Cash flows from investing
activities
Purchases of property and equipment
(13,425
)
(8,471
)
Proceeds from sale of property and
equipment
37
—
Insurance proceeds from casualty loss
29
—
Purchases of marketable securities
(162,321
)
(80,896
)
Proceeds from marketable securities
130,352
86,170
Net cash used in investing activities
(45,328
)
(3,197
)
Cash flows from financing
activities
Proceeds from line of credit
—
23,675
Repayment of line of credit
—
(23,675
)
Dividends paid
(61,630
)
(29,677
)
Proceeds from exercise of stock
options
9,573
24
Net cash used in financing activities
(52,057
)
(29,653
)
Change in cash and cash equivalents
(33,983
)
6,047
Cash and cash equivalents, beginning of
period
76,184
70,137
Cash and cash equivalents, end of
period
$
42,201
$
76,184
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
Note: The store counts noted
above do not reflect the impact of stores temporarily closed as a
result of the COVID-19 pandemic.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220310005844/en/
Investor Relations: Michael Henry,
Executive Vice President, Chief Financial Officer (949) 609-5599,
ext. 17000 irelations@tillys.com
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