GAAP Net Loss Per Share of $(0.65); Non-GAAP
Net Loss Per Share of $(0.48)
Non-GAAP Net Loss Per Share in Middle of
Outlook Range
Tilly’s, Inc. (NYSE: TLYS, the "Company") today announced
financial results for the first quarter of fiscal 2024 ended May 4,
2024.
"Our business continues to face many headwinds from the macro
environment, but we believe we are making progress on improving our
product margins and driving greater customer engagement through our
marketing efforts," commented Hezy Shaked, Co-Founder and Interim
President and Chief Executive Officer. "While we expect it to
remain difficult to improve our sales results in the near term, we
believe the efforts we are making now will produce benefits in the
future when the current environment improves."
Operating Results Overview
Fiscal 2024 First Quarter Operating
Results Overview
The following comparisons refer to the Company's operating
results for the first quarter of fiscal 2024 ended May 4, 2024
versus the first quarter of fiscal 2023 ended April 29, 2023.
- Total net sales were $115.9 million, a decrease of $7.8 million
or 6.3%, compared to $123.6 million last year. Total comparable net
sales, including both physical stores and e-commerce ("e-com"),
decreased by 9.4% relative to the 13-week period ended May 6, 2023.
- Net sales from physical stores were $92.8 million, a decrease
of $5.0 million or 5.1%, compared to $97.8 million last year, with
a comparable store net sales decrease of 8.6%. Net sales from
physical stores represented 80.1% of total net sales this year
compared to 79.1% of total net sales last year. The Company ended
the first quarter with 246 total stores compared to 248 total
stores at the end of the first quarter last year.
- Net sales from e-com were $23.0 million, a decrease of $2.8
million or 10.8%, compared to $25.8 million last year. E-com net
sales represented 19.9% of total net sales this year compared to
20.9% of total net sales last year.
- Gross profit, including buying, distribution, and occupancy
costs, was $24.3 million, or 21.0% of net sales, compared to $25.9
million, or 21.0% of net sales, last year. Product margins improved
by 130 basis points primarily due to the combination of a lower
markdown rate and improved initial markups. Buying, distribution,
and occupancy costs deleveraged by 130 basis points collectively,
despite being $0.8 million lower than last year, primarily due to
carrying these costs against lower net sales this year.
- Selling, general and administrative ("SG&A") expenses were
$45.1 million, or 38.9% of net sales, compared to $43.2 million, or
34.9% of net sales, last year. The $1.9 million increase in
SG&A was primarily attributable to an increase in non-cash
store asset impairment charges of $1.5 million and an increase in
store payroll and related benefits of $1.0 million due primarily to
average wage rate increases. These increases were partially offset
by a variety of smaller expense decreases.
- Operating loss was $20.8 million, or 17.9% of net sales,
compared to $17.3 million, or 14.0% of net sales, last year, due to
the combined impact of the factors noted above.
- Income tax benefit was $13,000 or 0.1% of pre-tax loss,
compared to $4.2 million, or 26.1% of pre-tax loss, last year. The
decrease in this quarter's effective income tax rate was primarily
attributable to the continuing impact of a full, non-cash deferred
tax asset valuation allowance (the "valuation allowance"). On a
non-GAAP basis, excluding the valuation allowance, income tax
benefit was $5.2 million, or 26.4% of pre-tax loss.
- Net loss was $19.6 million, or $0.65 net loss per share,
compared to $12.0 million, or $0.40 net loss per share, last year.
On a non-GAAP basis, excluding the valuation allowance, this year's
net loss was $14.5 million, or $0.48 net loss per share. Weighted
average shares were 30.0 million this year compared to 29.8 million
shares last year.
Non-GAAP Financial Measures
In addition to reporting financial measures in accordance with
generally accepted accounting principles ("GAAP"), the Company is
providing certain non-GAAP financial measures including "non-GAAP
income tax benefit," "non-GAAP net loss," and "non-GAAP net loss
per share." These amounts are not in accordance with, and should
not be construed as an alternative to, the most directly comparable
corresponding GAAP measure. The Company’s management believes that
these measures help provide investors with insight into the
underlying comparable financial results, excluding items that may
not be indicative of, or are unrelated to, the Company’s core
day-to-day operating results.
For a description of these non-GAAP financial measures and
reconciliations of these non-GAAP financial measures to the most
directly comparable corresponding financial measures prepared in
accordance with GAAP, please see the accompanying table titled
“Supplemental Financial Information; Reconciliation of Select GAAP
Financial Measures to Non-GAAP Financial Measures” contained in
this press release.
Balance Sheet and Liquidity
As of May 4, 2024, the Company had $68.0 million of cash, cash
equivalents and marketable securities and no debt outstanding
compared to $93.4 million and no debt outstanding as of April 29,
2023. Total inventories increased 1.8% as of May 4, 2024 compared
to April 29, 2023. Total year-to-date capital expenditures at the
end of the first quarter were $2.1 million this year compared to
$4.3 million last year.
Fiscal 2024 Second Quarter Outlook
Total comparable net sales for fiscal May ended June 1, 2024,
decreased by (8.4)% relative to the comparable four-week period
last year. Based on current quarter-to-date comparable net sales
results and current and historical trends, the Company currently
estimates the following for the second quarter of fiscal 2024:
- Net sales to be in the range of approximately $160 million to
$165 million, translating to an estimated comparable net sales
decrease in the range of approximately (10)% to (7)%, respectively,
relative to the comparable 13-week period last year;
- SG&A expenses to be in the range of $48 million to $49
million in the absence of any non-cash store asset impairment
charges;
- Effective income tax rate of near-zero due to the continuing
impact of the valuation allowance;
- After-tax results to be in the range of a net loss of
approximately $(3.9) million to $(0.9) million, respectively;
and
- Per share results to be in the range of a net loss of $(0.13)
to $(0.03), respectively, with estimated weighted average shares of
approximately 29.9 million.
The Company currently expects to have 247 total stores open at
the end of the second quarter of fiscal 2024 compared to 246 at the
end of last year's second quarter.
Conference Call Information
A conference call to discuss these financial results is
scheduled for today, June 6, 2024, 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) 300-8521 (domestic) or (412) 317-6026
(international). 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 until June 13, 2024, by dialing (844) 512-2921 (domestic)
or (412) 317-6671 (international) and entering the conference
identification number: 10188068.
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 246 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 our current
operating expectations in light of historical results, the impacts
of inflation and potential recession on us and our customers,
including on our future financial condition or operating results,
expectations regarding changes in the macro-economic environment,
customer traffic, our supply chain, 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
impact of inflation on consumer behavior and our business and
operations, supply chain difficulties, and our ability to respond
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, or enhance awareness of our brand and
brand image, general consumer spending patterns and levels,
including changes in historical spending patterns, 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 on the SEC’s
website at www.sec.gov and on 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)
May 4, 2024
February 3,
2024
April 29, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
19,880
$
47,027
$
43,686
Marketable securities
48,142
48,021
49,695
Receivables
7,135
5,947
12,973
Merchandise inventories
78,535
63,159
77,182
Prepaid expenses and other current
assets
9,742
11,905
9,332
Total current assets
163,434
176,059
192,868
Operating lease assets
199,613
203,825
216,385
Property and equipment, net
45,442
48,063
49,438
Deferred tax assets, net
—
—
12,728
Other assets
1,522
1,598
1,765
TOTAL ASSETS
$
410,011
$
429,545
$
473,184
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
22,013
$
14,506
$
24,730
Accrued expenses
12,712
13,063
14,253
Deferred revenue
14,127
14,957
14,792
Accrued compensation and benefits
8,457
9,902
9,056
Current portion of operating lease
liabilities
52,662
48,672
49,567
Current portion of operating lease
liabilities, related party
3,194
3,121
2,908
Other liabilities
253
336
446
Total current liabilities
113,418
104,557
115,752
Long-term liabilities:
Noncurrent portion of operating lease
liabilities
151,875
160,531
169,791
Noncurrent portion of operating lease
liabilities, related party
18,438
19,267
21,633
Other liabilities
278
321
487
Total long-term liabilities
170,591
180,119
191,911
Total liabilities
284,009
284,676
307,663
Stockholders’ equity:
Common stock (Class A)
23
23
23
Common stock (Class B)
7
7
7
Preferred stock
—
—
—
Additional paid-in capital
173,197
172,478
170,608
Accumulated deficit
(47,583
)
(27,962
)
(5,438
)
Accumulated other comprehensive income
358
323
321
Total stockholders’ equity
126,002
144,869
165,521
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
410,011
$
429,545
$
473,184
Tilly’s, Inc.
Consolidated Statements of
Operations
(In thousands, except per share
data)
(unaudited)
Thirteen Weeks Ended
May 4, 2024
April 29, 2023
Net sales
$
115,856
$
123,637
Cost of goods sold (includes buying,
distribution, and occupancy costs)
90,612
96,768
Rent expense, related party
931
931
Total cost of goods sold (includes
buying, distribution, and occupancy costs)
91,543
97,699
Gross profit
24,313
25,938
Selling, general and administrative
expenses
44,968
43,066
Rent expense, related party
133
133
Total selling, general and
administrative expenses
45,101
43,199
Operating loss
(20,788
)
(17,261
)
Other income, net
1,154
1,064
Loss before income taxes
(19,634
)
(16,197
)
Income tax benefit
(13
)
(4,229
)
Net loss
$
(19,621
)
$
(11,968
)
Basic net loss per share of Class A and
Class B common stock
$
(0.65
)
$
(0.40
)
Diluted net loss per share of Class A and
Class B common stock
$
(0.65
)
$
(0.40
)
Weighted average basic shares
outstanding
29,962
29,798
Weighted average diluted shares
outstanding
29,962
29,798
Tilly’s, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(unaudited)
Thirteen Weeks Ended
May 4, 2024
April 29, 2023
Cash flows from operating
activities
Net loss
$
(19,621
)
$
(11,968
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,095
3,214
Stock-based compensation expense
566
522
Impairment of assets
1,663
154
(Gain) loss on disposal of assets
(16
)
16
Gain on maturities of marketable
securities
(708
)
(295
)
Deferred income taxes
—
(4,231
)
Changes in operating assets and
liabilities:
Receivables
(822
)
(3,683
)
Merchandise inventories
(15,376
)
(15,065
)
Prepaid expenses and other assets
2,690
8,162
Accounts payable
7,480
8,765
Accrued expenses
14
441
Accrued compensation and benefits
(1,445
)
873
Operating lease liabilities
(2,254
)
(1,616
)
Deferred revenue
(830
)
(1,311
)
Other liabilities
(126
)
(173
)
Net cash used in operating
activities
(25,690
)
(16,195
)
Cash flows from investing
activities
Purchases of marketable securities
(29,496
)
(24,524
)
Purchases of property and equipment
(2,137
)
(4,255
)
Proceeds from maturities of marketable
securities
30,000
15,081
Proceeds from sale of property and
equipment
23
—
Net cash used in investing
activities
(1,610
)
(13,698
)
Cash flows from financing
activities
Proceeds from exercise of stock
options
153
53
Net cash provided by financing
activities
153
53
Change in cash and cash
equivalents
(27,147
)
(29,840
)
Cash and cash equivalents, beginning of
period
47,027
73,526
Cash and cash equivalents, end of
period
$
19,880
$
43,686
Tilly’s, Inc. Supplemental Financial
Information Reconciliation of Select GAAP Financial Measures
to Non-GAAP Financial Measures (In thousands) (unaudited)
Definitions of certain non-GAAP financial measures included in
the tables below are as follows:
- We define "non-GAAP income tax benefit" as loss before income
tax multiplied by an effective income tax rate of 26.3%.
Thirteen Weeks Ended
May 4, 2024
April 29, 2023
Income tax benefit
$
(13
)
$
(4,229
)
Non-cash valuation allowance on deferred
tax assets
(5,164
)
—
Non-GAAP income tax benefit
$
(5,177
)
$
(4,229
)
- We define "non-GAAP net loss" as net loss less non-cash
valuation allowance on deferred tax assets.
- We define "non-GAAP basic net loss per share" and "non-GAAP
diluted net loss per share" as non-GAAP net loss divided by the
weighted average shares outstanding on a basic and diluted basis,
respectively.
Thirteen Weeks Ended
May 4, 2024
April 29, 2023
Net loss
$
(19,621
)
$
(11,968
)
Non-cash valuation allowance on deferred
tax assets
(5,164
)
—
Non-GAAP net loss
$
(14,457
)
$
(11,968
)
Basic net loss per share of Class A and
Class B common stock
$
(0.65
)
$
(0.40
)
Diluted net loss per share of Class A and
Class B common stock
$
(0.65
)
$
(0.40
)
Non-GAAP basic net loss per share of Class
A and Class B common stock
$
(0.48
)
$
(0.40
)
Non-GAAP diluted net loss per share of
Class A and Class B common stock
$
(0.48
)
$
(0.40
)
Weighted average basic shares outstanding
used to compute GAAP and non-GAAP basic net loss per share
29,962
29,798
Weighted average diluted shares
outstanding used to compute GAAP and non-GAAP diluted net loss per
share
29,962
29,798
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)
2023 Q1
249
1
2
248
1,809
2023 Q2
248
—
2
246
1,792
2023 Q3
246
3
—
249
1,810
2023 Q4
249
3
4
248
1,801
2024 Q1
248
2
4
246
1,784
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240606366151/en/
Investor Relations: Michael Henry,
Executive Vice President, Chief Financial Officer (949) 609-5599,
ext. 17000 irelations@tillys.com
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