Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Tilly's, Inc. Announces Fiscal 2020 First Quarter Results, Provides Update on Store Reopenings


Tilly's, Inc. (NYSE: TLYS, the "Company") today announced financial results for the first quarter of fiscal 2020 ended May 2, 2020.

"The first quarter was severely impacted by the COVID-19 pandemic, resulting in the temporary closure of all 239 of our stores halfway through the quarter and the painful decision to furlough 91% of our employee population," commented Ed Thomas, President and Chief Executive Officer. "So much remains unpredictable at this time, but we are thankful that we have recently been able to bring some of our people back to work with the reopening of 160 of our stores thus far. We remain committed to the health and safety of our employees, customers and communities as we resume operating our stores."

First Quarter Results Overview

The following comparisons refer to operating results for the first quarter of fiscal 2020 versus the first quarter of fiscal 2019 ended May 4, 2019:

Balance Sheet and Liquidity

As of May 2, 2020, the Company had $111.1 million of cash and marketable securities, including $23.7 million borrowed under its credit facility and an aggregate of $13.3 million of withheld store lease payments for the months of April and May 2020. Excluding the cash borrowed under its credit facility and withheld store lease payments, the Company's remaining cash and marketable securities would have totaled $74.1 million as of May 2, 2020, compared to $109.8 million with no borrowings under its credit facility and no withheld lease payments as of May 4, 2019, the end of the first quarter of fiscal 2019. The Company ended the first quarter of fiscal 2020 with merchandise inventories per square foot up 10.8% compared to last year, primarily due to the store closures noted above. The Company canceled a substantial majority of its originally planned inventory receipts for the months of April through June 2020, and has significantly reduced its future inventory commitments through the remainder of fiscal 2020. As a result, the Company entered fiscal June 2020 with inventories per square foot down 10.5% compared to last year.

Fiscal 2020 Second Quarter Store Reopenings and Net Sales Update

During the second quarter of fiscal 2020 ending August 1, 2020, in accordance with the latest guidelines from local, state and federal governments and health organizations, and with new health and safety protocols in place, including significant restrictions on customer traffic, the Company has reopened 160, or 67%, of its total 239 stores as of June 2, 2020.

Since their respective reopening dates and through June 1, 2020, compared to the respective comparable prior year periods, collectively, customer traffic in the reopened stores has decreased by 34% and comparable store net sales in the reopened stores have increased by 1.2%. Individual comparable store net sales results since their respective reopening dates have ranged from a decrease of 91% to an increase of 160%, cumulatively, with 78 stores reporting cumulative comparable store net sales increases and 73 stores reporting cumulative comparable store net sales decreases.

Total comparable store net sales for the second quarter of fiscal 2020 through June 1, 2020, including e-commerce and periods for which physical stores were temporarily closed as a result of the COVID-19 pandemic, were $28.2 million, a decrease of $13.6 million or 32.6%, compared to $41.8 million for the comparable period last year. Comparable store net sales from physical stores were $8.2 million, a decrease of $27.7 million or 77.1% compared to $35.9 million for the comparable period last year. Net sales from e-commerce were $20.0 million, an increase of $14.0 million or 236.8% compared to $5.9 million for the comparable period last year.

As of June 1, 2020, the Company had $113.9 million of cash and marketable securities, including $23.7 million borrowed under its credit facility and an aggregate of $15.0 million of withheld store lease payments. Excluding the cash borrowed under its credit facility and withheld store lease payments, the Company's remaining cash and marketable securities would have totaled $75.2 million as of June 1, 2020, compared to $113.1 million with no borrowings under its credit facility and no withheld lease payments as of June 3, 2019.

At this time, the Company cannot predict with any certainty what future customer traffic or comparable store net sales results will be, the pace at which additional stores may be able to reopen, or whether re-opened stores will be allowed to remain open in the future, nor can the Company ensure that the foregoing store reopening results will be indicative of future performance in these uncertain times.

Conference Call Information

A conference call to discuss these financial results is scheduled for today, June 3, 2020, 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 until June 17, 2020, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13702975. Please note participants must enter the conference identification number in order to access the replay.

About Tillys

Tillys is a leading, destination specialty retailer of casual apparel, footwear and accessories 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 239 total stores (160 of which have reopened as of June 2, 2020), including one RSQ-branded pop-up store, 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 that we may take in the future 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, 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)

   

 

 

May 2,
2020

 

February 1,
2020

 

May 4,
2019

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

65,133

 

 

$

70,137

 

 

$

33,864

 

Marketable securities

 

45,981

 

 

69,780

 

 

75,953

 

Receivables

 

13,421

 

 

7,485

 

 

6,288

 

Merchandise inventories

 

67,650

 

 

56,901

 

 

58,963

 

Prepaid expenses and other current assets

 

2,092

 

 

4,561

 

 

5,294

 

Total current assets

 

194,277

 

 

208,864

 

 

180,362

 

Operating lease assets

 

252,554

 

 

263,649

 

 

244,139

 

Property and equipment, net

 

61,941

 

 

66,176

 

 

70,608

 

Other assets

 

7,422

 

 

7,951

 

 

2,176

 

Total assets

 

$

516,194

 

 

$

546,640

 

 

$

497,285

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

24,837

 

 

$

20,562

 

 

$

23,479

 

Accrued expenses

 

13,591

 

 

20,755

 

 

17,044

 

Line of credit

 

23,675

 

 

?

 

 

?

 

Deferred revenue

 

10,719

 

 

11,761

 

 

9,105

 

Accrued compensation and benefits

 

5,098

 

 

7,190

 

 

7,019

 

Dividends payable

 

?

 

 

29,677

 

 

?

 

Current portion of operating lease liabilities

 

65,595

 

 

55,321

 

 

52,600

 

Total current liabilities

 

143,515

 

 

145,266

 

 

109,247

 

Noncurrent operating lease liabilities

 

229,127

 

 

240,755

 

 

222,086

 

Other

 

558

 

 

718

 

 

1,422

 

Total liabilities

 

373,200

 

 

386,739

 

 

332,755

 

Stockholders' equity:

 

 

 

 

 

 

Common stock (Class A)

 

22

 

 

22

 

 

22

 

Common stock (Class B)

 

8

 

 

8

 

 

8

 

Preferred stock

 

?

 

 

?

 

 

?

 

Additional paid-in capital

 

153,878

 

 

153,377

 

 

150,331

 

(Accumulated deficit) Retained earnings

 

(11,115

)

 

6,280

 

 

14,012

 

Accumulated other comprehensive income

 

201

 

 

214

 

 

157

 

Total stockholders' equity

 

142,994

 

 

159,901

 

 

164,530

 

Total liabilities and stockholders' equity

 

$

516,194

 

 

$

546,640

 

 

$

497,285

 

Tilly's, Inc.

Consolidated Statements of (Loss) Income

(In thousands, except per share data)

(unaudited)

   

 

 

Thirteen Weeks Ended

 

 

May 2,
2020

 

May 4,
2019

Net sales

 

$

77,289

 

 

$

130,303

 

Cost of goods sold (includes buying, distribution, and occupancy costs)

 

75,695

 

 

94,619

 

Gross profit

 

1,594

 

 

35,684

 

Selling, general and administrative expenses

 

29,995

 

 

35,538

 

Operating (loss) income

 

(28,401

)

 

146

 

Other income, net

 

409

 

 

829

 

(Loss) income before income taxes

 

(27,992

)

 

975

 

Income tax (benefit) expense

 

(10,597

)

 

298

 

Net (loss) income

 

$

(17,395

)

 

$

677

 

Basic (loss) income per share of Class A and Class B common stock

 

$

(0.59

)

 

$

0.02

 

Diluted (loss) income per share of Class A and Class B common stock

 

$

(0.59

)

 

$

0.02

 

Weighted average basic shares outstanding

 

29,677

 

 

29,469

 

Weighted average diluted shares outstanding

 

29,677

 

 

29,808

 

Tilly's, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

   

 

 

Thirteen Weeks Ended

 

 

May 2,
2020

 

May 4,
2019

Cash flows from operating activities

 

 

 

 

Net (loss) income

 

$

(17,395

)

 

$

677

 

Adjustments to reconcile net (loss) income to net cash used in operating activities:

 

 

 

 

Depreciation and amortization

 

5,024

 

 

5,209

 

Stock-based compensation expense

 

501

 

 

529

 

Impairment of assets

 

333

 

 

?

 

Loss on disposal of assets

 

?

 

 

10

 

Gain on sales and maturities of marketable securities

 

(330

)

 

(549

)

Deferred income taxes

 

591

 

 

(130

)

Changes in operating assets and liabilities:

 

 

 

 

Receivables

 

(5,936

)

 

246

 

Merchandise inventories

 

(10,749

)

 

(3,154

)

Prepaid expenses and other assets

 

2,411

 

 

479

 

Accounts payable

 

4,661

 

 

(895

)

Accrued expenses

 

(5,284

)

 

(806

)

Accrued compensation and benefits

 

(2,092

)

 

(1,911

)

Operating lease liabilities and deferred rent

 

9,741

 

 

(715

)

Deferred revenue

 

(1,042

)

 

(1,268

)

Net cash used in operating activities

 

(19,566

)

 

(2,278

)

Cash flows from investing activities

 

 

 

 

Purchases of property and equipment

 

(3,548

)

 

(3,059

)

Purchases of marketable securities

 

(5,996

)

 

(34,572

)

Proceeds from marketable securities

 

30,108

 

 

35,000

 

Net cash provided by (used in) investing activities

 

20,564

 

 

(2,631

)

Cash flows from financing activities

 

 

 

 

Line of credit

 

23,675

 

 

?

 

Dividends paid

 

(29,677

)

 

(29,453

)

Proceeds from exercise of stock options

 

?

 

 

151

 

Taxes paid in lieu of shares issued for stock-based compensation

 

?

 

 

(85

)

Net cash used in financing activities

 

(6,002

)

 

(29,387

)

Change in cash and cash equivalents

 

(5,004

)

 

(34,296

)

Cash and cash equivalents, beginning of period

 

70,137

 

 

68,160

 

Cash and cash equivalents, end of period

 

$

65,133

 

 

$

33,864

 

Tilly's, Inc.

Store Count and Square Footage

   

 

 

Stores
Open at
Beginning of
Quarter

 

Stores
Opened
During Quarter

 

Stores
Closed
During
Quarter

 

Stores
Open at
End of Quarter

 

Total Gross
Square Footage
End of Quarter
(in thousands)

2019 Q1

 

229

 

1

 

1

 

229

 

1,708

2019 Q2

 

229

 

1

 

1

 

229

 

1,710

2019 Q3

 

229

 

4

 

1

 

232

 

1,732

2019 Q4

 

232

 

8

 

?

 

240

 

1,776

2020 Q1

 

240

 

?

 

1

 

239

 

1,768

 


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